Archive for December, 2021

Christmas gifts for staff

Thursday, December 2nd, 2021

Readers are reminded that there is a tax-free allowance for the provision of an annual party or other event for the benefit of staff and their partners. The present limit to tax relief is £150 per head. If this amount is exceeded, the full cost of the benefit is taxable not the excess over £150.

Where it’s not possible to calculate individual costs, an averaging process can be adopted. There are also other considerations that must be met to qualify for this relief.

Another way to benefit staff tax-free for Christmas is to consider making small gifts.

You don’t have to pay tax on a benefit (gift) to your employee if all of the following apply:

  • it costs you £50 or less to provide
  • it isn’t cash or a cash voucher
  • it isn’t a reward for their work or performance
  • it isn’t in the terms of their contract

Gifts that fall into this category are known as a ‘trivial benefit’; and whilst they may be much more than trivial in substance, you don’t need to pay tax or National Insurance or let HMRC know you are making the gift.

Any gifts that do not meet this definition will likely be taxable.

Gifts to directors are treated in a similar fashion with one over-riding condition: a director cannot receive trivial gifts of more than £300 in total each tax year. This restriction only applies to the directors of “close companies”. A close company is a limited company with five or fewer shareholders.

Watch out for VAT charge

If you recover the input tax charged when you buy gifts for employees, and if the total value of gifts given to an employee in a tax year exceeds £50, then you will have to account for VAT on the total value of gifts provided. If this is the case, you may be advised to avoid recovering the VAT in the first place.

Increasing footfall

Thursday, December 2nd, 2021

Footfall measures the number of times a customer returns to your business to purchase goods and services.

Many business owners believe that the most effective way to increase turnover is to win more customers or to charge them more for purchases. Both of these strategies may work to increase sales, but both contain hidden costs.

Winning more customers

To be successful at this enterprise you will need invest in marketing campaigns, including advertising and social media costs.

Increasing your prices

The danger here is that customers will react to price increases and shop elsewhere for supplies.

Whilst we are not suggesting that you should abandon either of these strategies, by far the most cost-effective way to boost turnover numbers is to inspire your existing customers to increase the number of occasions they buy from you each year.

Increasing footfall

Cross-selling to existing customers is like preaching to the converted. You have met the costs of acquiring the customer, now you need to encourage them to come and buy from you more often.

Every time they return you increase sales and release more profit into your trading results.

If you are new to this notion, increasing footfall, we would be happy to discuss strategies that you could employ.

Of the three, increasing footfall, increasing prices, or winning new customers, increasing footfall will have the most impact on your financial results.