Between employees booking time off, the end of year crunch, and the Christmas rush itself, December is always the month with the least free time to handle other requirements.
And yet it’s also a time when plans are put in place for the new year, and where celebrations and gifts are common business expenses.
One of the most practical solutions to this is to carry out a proper review of your finances ahead of December, so you’ve got a clear understanding of where your business stands. This can also help you make decisions for December itself that can be key for staff morale.
Here, then, is a quick checklist for things to look at over November so your business’ winter season gets easier.
Carry Out a 2026 Expenses Audit
Now is the perfect time to look at a year’s worth of expenses so you know what needs to stay and what might need to be changing in 2027.
Look over your expenses closely. You’re looking for:
- Any outstanding invoices that need to be paid by year’s end
- Any subscriptions or software payments for products that haven’t turned out to add value.
- Outstanding personal outlays to be reimbursed
- Unclaimed expenses, including mileage
- Equipment purchases below the capital allowance which could be moved forward
You may not choose to make some changes – maybe the cashflow situation prohibits buying extra equipment, or you believe that a particular software subscription will pay off soon – but keeping an eye on these gives you opportunities to improve your tax situation, improve your cashflow, and boost employee morale.
Staff Christmas Party Rules Refresher
You’ve probably already arranged your party. All the same, here are rules to keep in mind, especially if any adjustments need to be made!
An allowance for annual staff functions exists, running to £150 per head (guests included) per year.
That means that if you also run a summer party, the total is divided between the two events. For the most part, everyone remembers this; the thing that tends to catch at least some people out is that this allowance vanishes if the event is over budget. If you’re throwing a party for three people and you spend £451, you’re only over by £1 – but that’s enough that the whole amount is taxable!
As you can imagine, the bigger the business, the bigger the impact this can have.
You also need to keep your records of attendance and costs, and the event must be open to all staff at a given location.
You should also remember that contractors attending the Christmas party have seen this used as proof they’re a ‘disguised employee’ under IR35 rules – so it can be wisest not to invite them, but to explain why in case they’re not already aware.
Promotional Gifts for Clients
Client entertainment is not typically tax deductible. Gifts can be expensed provided:
- They are not tobacco, food, drink, or vouchers to be redeemed
- They are branded with your company name
- They cost less than £50 per recipient
As with the Christmas party, that £50 isn’t for one instalment but for every give over the course of the tax year
While it’s not uncommon to send clients Christmas cards and gifts over the holiday period, these are only tax deductible if the rules above are followed.
Staff Gifts: Trivial Benefits
Trivial benefits are tax free, but there are limitations governing them. Some of these will be familiar from the rules for clients, but you can give out more trivial benefits over the course of the year.
The criteria are:
- The gift may not be cash or a voucher for cash
- The gift may not be contractually obligated
- The gift may not be a reward for performance
- The gift must have a value of £50 or less
Other gifts are allowed but are taxable.
This holiday season, make sure you spend responsibly. The benefits to morale and planning are well worthwhile, but it can take a little planning to make the most of your expenses in this context. Get in touch if you’d like to check specifics.
