Gifts to Employees

Sam Jones (MAAT, ACCA)

In the lead up to Christmas as an employer you might be feeling particularly festive and generous and so are considering giving some kind of a gift to your employees as a thank you for all the hard work they have done over the year. To avoid falling in the pitfalls surrounding the area of employee benefits we thought it would be useful to give a few examples of what you can gift.

It is worth noting that any 'gift' may be subject to tax if the arrangement is linked with the employee giving up an amount of salary to receive the benefit, this is more commonly known as salary sacrifice.

Trivial Benefits

A gift is classed as 'trivial', and therefore exempt from tax, if it is less than £50 (per employee) in value. It is important to note that a cash gift or a cash voucher is always taxable irrespective of the value. Christmas food hampers are a good example of a trivial gift for employees, alternatively HMRC suggest a flu vaccination - although I'm not sure this is really in the true spirit of Christmas!

Staff Parties

Another form of employee benefits that are exempt from tax are staff annual functions, i.e. the Christmas Party! The costs are tax-free as long as the total cost per employee is not more than £150 per year. You must be careful however, as if the cost is more than £150 he whole amount is taxable.