73: DEDUCTIONS FOR BUSINESS GIFTS: YEARLY LIMIT
1. This clause
increases the de minimis limit for expenditure on business gifts from
£10 to £50.
DETAILS OF THE
CLAUSE AND SCHEDULE
(1) provides for section 577 of the Taxes Act 1988 to be amended.
(2) increases the de minimis limit for expenditure on business
gifts from £10 to £50 a year. It also clarifies that the “year” to
which the limit applies is a “relevant tax period”.
(3) defines “relevant tax period”. For corporation tax, it is
an accounting period. For income tax, where an assessment is made
by reference to a basis period for the year of assessment, the “relevant
tax period” is that basis period. Where income tax assessment is not
made by reference to a basis period, the “relevant tax period” is
the year of assessment.
Subsection (4) implements the increase for corporation tax
payers with effect from accounting periods beginning on or after 1
April 2001. It implements the increase for income tax payers with
effect from the 2001-02 year of assessment.
Section 577 of the Taxes Act 1988 provides that expenditure on business
entertainment and business gifts is not generally deductible for the
purpose of computing business profits chargeable to tax under Schedules
A or D. Similarly, such expenditure cannot normally be deducted from
emoluments chargeable to tax under Schedule E.
the item does not consist of food, drink, tobacco or a token or voucher
exchangeable for goods; and
· the cost of
the item to the donor, together with the cost to him of any other
such gifts given to the same person in the same, unspecified, year
does not exceed £10.
corresponding VAT de minimis limit for business gifts is to be increased
from £15 to £50 by virtue of The Value Added Tax (Business Gifts
of Small Value) Order 2001, No 735, made and laid before the House
on 7 March 2001 and coming into force on 8 March 2001. The Order is
subject to the negative resolution procedure.