To qualify as a gift, the item must fall into one of the following categories:
The gift is something that the business makes or sells. This can include food, alcohol, fuel or tobacco.
The gift contains an advertisement for the business. This cannot be food, drink, fuel or tobacco. The gift must not exceed an annual amount of £50 per recipient (if it does, you will have to pay the VAT to HMRC).
If the gift doesn’t meet these criteria then it should be recorded as business entertaining, and is not tax-deductible.
You also wouldn’t be able to reclaim any input VAT you paid on the cost of buying this non-tax-deductible gift.
Please note: There might also be VAT to pay on the gifts.
You can record gifts under the category ‘Advertising, Promotion and Entertainment > Gifts’: