Clause 21 - Business gifts
Finance Bill
9:45 am
Mr John Healey (Economic Secretary, HM Treasury; Wentworth, Labour)
This is a small and simple measure, but it will be none the less welcome to many businesses and to members of the Committee. The Committee will know that firms from across the country routinely offer gifts to visitors, clients, partners and, on some occasions, visiting MPs in furtherance of their business. Such business gifts have traditionally qualified for VAT relief provided that their value does not exceed a prescribed limited and that they are given to an individual only once in a 12-month period. In Budget 2001, we increased the limit on the value of gifts qualifying for relief from £15 to £50.
There is, however, an anomaly in the rules. If a business gives a succession of gifts to the same person, the gifts are subject to VAT even if their total value over a 12-month period does not exceed the £50 limit. The clause replaces the current qualifying criteria with a provision that any number of business gifts made to the same person in a 12-month period will qualify for relief where the total cost does not exceed £50. The clause is small, simple and sensible, and I commend it to the Committee.