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ccording to the Bank of England, the average family spends £2,000 per month with typical £500 additional spending in December. The increase is mainly driven by people going out, eating and drinking more, but we also spend an extra 80% on books during December than we do at any other time of the year.
Photo by Sophie Ward Photography
Myy children children cannot cann gine a time when w imagine you had to go to a shop or, shock horror, waited more than 24 hours for something to arrive.
Online spending for Christmas 2016 accounted for £1 in every £6 spent but, by 2017, this had increased to £1 in every £4 spent for non-food purchases. “Experts” believe that this may now have plateaued. Personally, I think it has further to go – I would estimate that 80% of what my own household consumes is ordered online and delivered to our door. My children cannot imagine a time when you had to go to a shop or, shock horror, waited more than 24 hours for something to arrive. For most people, Christmas is about family and giving. If you have children, giving quite a lot by the sounds of it. An article from 2015, setting out the findings of research commissioned by a high street bank, reported that the average parental spend per child was £177 per year – a total of £3,186 by the time the child turned 18. That figure doesn’t include grandparents, aunts and uncles. On top of this, the average child receives £120 in cash from friends and relatives. What will be this year’s most wanted Christmas present, I wonder? It seems unlikely that any one toy could rival the toy sales of yesteryear which have decreased sharply since the eighties and early nineties. Gone are the days of selling 115 million Cabbage Patch Dolls, 76 million Tamagotchi or 125 million Bratz dolls. Oh, the irony too of the best-selling toy of 2012, the Nerf gun: designed in 1969 for “safe indoor play.” Anyone whose child has one of these will testify that they are rarely used with the word “safe” in mind. There are few hallowed toys that make the best-seller list more than once. Furbies (seriously, why?) and the craze that gripped us all in 1980 – the Rubik’s Cube, invented in 1974 by Erno Rubik, a Hungarian sculptor and professor of architecture, and of which 350 million have been sold worldwide to date.
The information in this article is general guidance and does not constitute advice. If you require advice, you should contact a qualified accounting or taxation professional. The Institute of Chartered Accountants in England and Wales and the Chartered Institute of Taxation maintain registers of members and firms.
‘Tis far better to give than to receive Christmas is an important time for charities as well as retailers. Charity cards alone raise £50 million per year which seems quite a lot until you realise that this is only 3% of the total £1.7 billion spent each year on greeting cards. The Royal Mail estimated that around 1 billion Christmas cards would be sent in 2017 and say that 80% of people would rather receive a traditional card to an electronic message (go figure). There was however a 600% spike in the number of people choosing to donate to charity the money they would have spent on cards.
The charities that really resonate with us all during the festive season are the ones that support the vulnerable in our society – the homeless, the elderly and children. Save the Children has a jumper day in December and the Salvation Army, Centrepoint and the NSPCC all run powerful, multimedia campaigns. It’s not just online retail sales that are on the up either. In 2017, online giving increased by 12.1% year on year, bringing the value of donations via websites, social media and apps to £2.4 billion – 26% of all donations. From me to you It would be remiss of me not to give you a little present of my own – a bit of free tax advice on charitable donations. Companies can claim tax relief for donations made to charities provided they really are a gift and the company is not receiving something of value in return. This is not restricted to donating money – it could be equipment, stock or employees’ time. As you would expect there are rules governing the valuation of non-cash donations, but your accountant can help you with this. Companies cannot however Gift Aid their donation. If you work as a sole trader or as part of a partnership, you are governed by the same tax rules as private individuals. This is where Gift Aid comes into play. Gift Aid is a system through which the donation you make is deemed to be net of income tax at the basic rate (currently 20%). If you sign a Gift Aid declaration, the charity can then reclaim the income tax and this boosts your donation by 25p for every £1 you give. There is a caveat here though – you must have paid at least as much income or capital gains tax as the charity is reclaiming and you must also inform the charity if your donations cease to qualify. What’s more, if you’re a higher rate taxpayer, you can also reclaim higher rate relief through your tax return or by asking HMRC to amend your tax code. Effectively you are taxed at the basic rate (20%) rather than the higher rate (40%) on the amount you have given to charity. Wherever and however you choose to spend your money this Christmas, may yours be merry and bright, and, if we’re lucky, maybe it will also be white.
P.S. I know that I have mentioned this before, but it would also be remiss of me not to sneak in a mention of an incredible local charity; at Composure we are proud to support Chestnut Tree House, the children’s hospice for Sussex and South East Hampshire which cares for 300 children and young adults with progressive life-shortening conditions. They are an amazing organisation – you can find out more about them at: http://www.chestnuttree-house.org.uk/
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