Why Is It Important To Thank Clients And Staff At Christmas?

How do you thank clients and staff at Christmas? If you are in quandary as to whether it’s all worth it, our latest article should help. It’s certainly not long to go, but there is still time to send clients and your team a Christmas message or gift. It’s a great time to thank customers and remind them of your brand. Your team has also been working really hard throughout the year, so it’s the perfect time to reward them with something special, so they feel appreciated. In the latest article from team4, bookkeepers based in East Sussex with worldwide clients, we look at why you should thank clients and staff at Christmas, the things you can do, what defines a business gift according to HMRC and whether these things are tax and VAT deductible.

 

Why should you thank clients at Christmas?

 

• Creates a positive association with your brand

• Increases customer loyalty

• Helps to build better relationships

• Leaves a special and lasting impression

• Promotes good will

• Keeps your brand in customer’s minds

• Highlights your appreciation and gratitude

• Gives an opportunity for an extra promotion

• Provides a way of reconnecting with clients

Why should you thank staff at Christmas?

 

• Appreciation of their hard work throughout the year

• Boosts morale for the coming year

• Promotes employee loyalty

• Acts as a reminder of the positive environment they are working in

• Makes employees feel valued

• Improves productivity

• Emphasises they are part of a warm and caring team

• Increases results and motivation

 

How to thank clients and staff at Christmas

 

• Send a thank you message in the form of a Christmas card

• Send a gift for Christmas – thoughtful branded gift

• Take them out for a festive lunch

• Invite them to a special event

• Post about them on social media

 

For customers, you could implement a loyalty programme, possibly discounts on repeat subscriptions, and rewards that accumulate with the more they purchase.

Thanking your team

 

When considering your team, you could give recognition awards, personal gifts and post Christmas incentives. Upgrading their workspace goes down well which could include an ergonomic office chair or an upgraded room for breaks. And don’t forget to get the office into the festive mood with decorations including a tree and Santa hats.

 

What is a ‘business gift’?

 

‘A business gift is a gift of goods that is made in the course of promoting your business and for which you were entitled to reclaim the VAT you were charged on its purchase as input tax. By ‘gift’ we mean a definite, voluntary and unconditional transfer of the goods for no consideration.’

 

If you do want to thank clients and staff at Christmas in this way, it’s probably fair to say that in general business gifts are not tax-deductible as the vast majority fall under the category of entertaining. However, there are exceptions and the specialist bookkeepers at team4 will be able to help you.

 

Tax and VAT implications

 

1. If the total cost, including VAT is less than £50 per employee, tax relief is available for the cost of businessesproviding company gifts to employees. The VAT can also be reclaimed on the cost of the gift. There are exceptions and the gift must not be cash or a cash voucher, cannot be linked to the employee’s performance, or provided as part of a salary sacrifice scheme. Gifts over £50 are treated as a ‘benefit in kin’ and are therefore taxable to the employer and employee.

 

2. Annual office events such as Christmas parties are also allowable for both corporation tax and VAT relief. The so-called ‘annual event’ allowance allows you to spend up to £150 per head on a tax-free event or series of events. However there are a number of points your should be aware of:

 

• The event must recur annually

• Must be available to all employees generally

• The £150 per head ‘exemption’ is inclusive of VAT, as well as any transport to and from the event, or accommodation for attendees

• If the cost of the event is greater than the £150 exemption, then the whole amount and not just the excess may result in a benefit in kind to the employee

 

3. Business gifts allowable for tax purposes to customers or clients fall into two categories:

• Giveaways to the public (like a free sample) to advertise your business

• Gifts less than £50 that advertise your business, not including food, drink or tobacco

 

Vouchers are allowable in this instance, so long as they are not exchangeable for cash. Multiple gifts to the same person amounting to more than £50 are subject to tax.

How can team4 help?

 

We hope team4 has demonstrated how important it is for you to thank clients and staff at Christmas and at othertimes of the year. It demonstrates to clients that you appreciate their continued business and to staff that you recognise their loyalty, hard work and professionalism. Customer retention and satisfaction are the key ingredients to a successful business. By thanking them you are showing that you recognise their invaluable contribution and you are also saying thank you for their ongoing support. If you are confused as to what constitutes a business gift and whether it is tax deductible, please get in touch with team4. You don’t want to be making any costly mistakes. Call us on +44 1825 763378 or +44 1903 442511 or email info@team4bookkeeping.co.uk