Tax implications for employee gifting

5th December 2017

Some employers like to give their employees a small gift at this time of year.

A tax exemption applies giving employers reassurance that the benefits provided are exempt and won’t result in a reportable employee benefit.

To ensure the benefit is exempt, the following conditions must be met:-

  • The cost of the benefit does not exceed £50.00 per employee (or on average when gifts are made to more than one employee)
  • The benefit is not made in cash or a cash voucher
  • The employee is not entitled to the voucher as part of a contractual arrangement, including salary sacrifice
  • The benefit is not provided in recognition of particular services performed by the employee as part of their employment duties.
  • If the employer is a “close” company and the benefit is given to an individual who is a director, an office holder or member of their household or family, then the exemption is capped at a total cost of £300.00 in a tax year.

If any of these exemptions are not met then the benefits will become taxable subject to any other exemptions or allowable deductions.

The main condition is that the cost of the benefit does not exceed £50. If this is exceeded then the whole amount is taxable, not just the excess over £50.00.

Benefits of £50.00 or under are classed as trivial by HMRC, examples of these are gifts of turkeys, bottles of wine or gift vouchers.

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