Is gifts to clients
tax deductible?

Partly. Gifts to clients and customers are treated like entertainment and not allowable, unless the gift carries a conspicuous advert for your business, costs no more than £50 per recipient per tax year, and is not food, drink, tobacco or a voucher (HMRC BIM45070). Free samples of your own products given to advertise them are allowable (BIM45071).

A Christmas hamper for your best client, a bottle of wine for a referral, a gift card as a thank you: all common, and all disallowed. The only gifts the law lets you deduct are small promotional items with your branding on them, such as diaries, pens and mugs, within a £50 a year limit per person.

Is gifts to clients tax deductible?

The HMRC rule

Business gifts are not allowable, except gifts carrying a conspicuous advertisement for the business that cost no more than £50 per recipient in the tax year and are not food, drink, tobacco or vouchers. The rule comes from HMRC Business Income Manual BIM45070: small gifts, HMRC Business Income Manual BIM45065: gifts, Marketing, entertainment and subscriptions.

HMRC's manual says business gifts are treated in the same way as business entertaining and are not allowed, with exceptions (BIM45000). Gifts carrying a conspicuous advertisement for the trader are allowed, unless the gift is food, drink, tobacco or a voucher, or the total cost of gifts to the same recipient in the tax year exceeds £50 (BIM45070). Free samples given to the public to advertise your goods are deductible (BIM45071).

When you can claim it

• Branded pens, diaries, mugs, calendars and similar items up to £50 per recipient a year.
• Free samples of your own products given to advertise them.
• Gifts to your employees, which are staff costs.
• Gifts to charities of trading stock, in some cases.

When you cannot

• Food, drink, hampers, chocolates or wine, even if branded.
• Gift cards and vouchers.
• Unbranded gifts of any value.
• Branded gifts where the total to one person in the year is over £50.

What to claim instead

If you want to thank clients in a way the tax rules allow, choose a useful branded item under £50. If you prefer to send a hamper or wine, do so knowing it is paid from after-tax profit.

How to decide if you can claim it

1. Was it for the business? A cost is only allowable if you incur it wholly and exclusively for the business. If it also serves a personal purpose that cannot be separated, such as clothing that keeps you warm or a meal that keeps you going, HMRC disallows it.
2. Is part of it personal? Where a cost has a business part you can identify, such as the business calls on a phone bill or the business miles in a car, you claim that part and leave the rest out, on a reasonable basis you can explain.
3. Is it a running cost or something you keep? It is a running cost, so on the cash basis it counts when you pay it and on traditional accounting when you incur it. Nothing about it needs spreading over later years.
4. Is there a specific rule? For gifts to clients, the deciding rule is gifts to customers: business gifts are not allowable, except gifts carrying a conspicuous advertisement for the business that cost no more than £50 per recipient in the tax year and are not food, drink, tobacco or vouchers.

Worked example: Christmas gifts for clients

An accountant sends 40 clients a branded desk calendar costing £8 each, £320, and sends her five biggest clients a £60 hamper, £300. The calendars are allowable. The hampers are food and drink and over £50, so they are disallowed on both counts.

The conspicuous advert

The advert must be on the gift itself, and conspicuous, such as your logo on a mug or your name on a calendar. A gift in branded wrapping or with a business card attached does not count. The point is that the gift keeps advertising the business after it is given.

The £50 limit

The £50 limit is the total cost of allowable-type gifts to the same recipient in the tax year. If the total goes over £50, none of those gifts are allowable, not just the excess. Keep a list of who received what so you can check, especially if you send branded items to the same clients at several points in the year.

Food, drink and vouchers

Food, drink, tobacco and vouchers exchangeable for goods are excluded from the exception entirely, however small and however branded. A branded bottle of wine or box of chocolates is still disallowed.

Gifts that are not really gifts

Something given as part of a contract or sale, such as a free product with a purchase, is not a gift: it is part of the sale. HMRC's manual gives the example of a baker reducing the price of bread at the end of the day, which is a normal commercial transaction. Genuine rewards required by a contract can also fall outside the gifts rule.

Gifts to staff

Gifts to your employees are staff costs, allowable, and usually tax-free for them as trivial benefits if they cost £50 or less and are not cash or a reward for work (trivial benefits). The client gift rules do not apply to employees.

Where it goes

Allowable promotional gifts go in advertising, box 24 of the full self-employment pages. Disallowed gifts, if in your accounts, go in box 24 and also box 39.

Where it goes on your return and in MTD

On the self-employment pages of your return, the claimable part of gifts to clients belongs in business entertainment (SA103F box 24, disallowed in box 39). The same category is used in Making Tax Digital quarterly updates, so recording it in the right place once keeps both returns consistent.

If your turnover was under £90,000, you can use the short self-employment pages (SA103S), which ask for a single figure for total allowable expenses rather than a box-by-box breakdown, and the full pages let you give just a total in box 31 too. The category still matters for your own records and for Making Tax Digital, where each quarterly update uses the same categories unless you choose to send one consolidated figure.

The accounting basis changes when a cost counts. On the cash basis, the default for sole traders since 2024/25, it counts when you pay it; on traditional accounting, when you incur it, with things you keep claimed through capital allowances.

How much an allowable cost saves

An allowable expense does not come back to you in full: it reduces your profit, so it saves tax at your marginal rate. For a sole trader in England, Wales or Northern Ireland that is 26p in the pound at the basic rate (20% Income Tax plus 6% Class 4 National Insurance) and 42p at the higher rate. The sole trader tax calculator works out the figure for your own profit.

What £1,000 of allowable expense saves a sole trader in 2026/27

• Basic rate (20% + 6%)£260
• Higher rate (40% + 2%)£420
• Additional rate (45% + 2%)£470
• Allowance taper band (60% + 2%)£620

Records to keep

Keep receipts with a note of who was entertained or received the gift, their business connection, and the occasion. The note decides the treatment: staff, clients and suppliers are treated differently, so a receipt alone is rarely enough.

If Making Tax Digital for Income Tax applies to you (qualifying income over £50,000 from April 2026, £30,000 from April 2027 and £20,000 from April 2028), the records must be digital, and each quarter's costs go into a quarterly update. Check your date with the MTD requirement checker.

Common mistakes

• Claiming hampers, wine or chocolates for clients.
• Claiming gift cards as marketing.
• Exceeding £50 per recipient with branded items.

Related expenses

This item sits in the business entertainment category, alongside alcohol and client entertainment. The A to Z of expenses answers the same question for every other cost.

If you record your costs in TapTax, each one lands in the HMRC category it belongs to, with its receipt attached, so your quarterly updates and year-end return use the same figures.