Christmas is the time for parties and if you hold a staff party to reward your staff for all their hard work, you can reclaim VAT on all the costs. If, however, your employees bring along guests who don’t work for the company, then you must apportion the VAT reclaimed to reflect this.
If you also want to reward them with a gift, you need to be careful. You can give a gift to an employee without having to declare output tax, as long as the value of gifts given to that employee do not exceed £50, exclusive of VAT, within a 12 month period. If the gifts exceed the £50 limit, then you have to declare output VAT on the total amount of those gifts. You will, however, be entitled to reclaim input VAT on the purchase cost.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.
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