Employee gifts - tax free?
At this time of year some employers may wish to make small gifts to their employees.
A tax exemption is available which should give employers certainty that the benefits provided are exempt and do not result in a reportable employee benefit in kind. In order for the benefit to be exempt it must satisfy the following conditions:
- the cost of providing the benefit does not exceed £50 per employee (or on average when gifts made to multiple employees)
- the benefit is not 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
- where the employer is a 'close' company and the benefit is provided to an individual who is a director, an office holder or a member of their household or their family, then the exemption is capped at a total cost of £300 in a tax year.
If any of these conditions are not met then the benefit will be taxed in the normal way subject to any other exemptions or allowable deductions.
One of the main conditions is that the cost of the benefit does not exceed £50. If the cost is above £50 the full amount is taxable, not just the excess over £50.The cost of providing the benefit to each employee and not the overall cost to the employer determines whether the benefit can be treated as a trivial benefit. So, a benefit costing up to £50 per employee whether provided to one or more employees can be treated as trivial. Where the individual cost for each employee cannot be established, an average could be used. Some HMRC examples consider gifts of turkeys, a bottle of wine or alternative gift voucher.
Further details on how the exemption will work, including family member situations, are contained in HMRC manual.
However if you are unsure please do get in touch before assuming the gift you are about to provide is covered by the exemption.
Internet link: HMRC manual
Being immersed in the nitty gritty of tax? Talk to Simon Boxall at Ward Williams who can help with some thorny subjects such as should I let my property furnished or unfurnished? Or when should I do maintenance work?Jeremy Wasden, Director at Belvoir Lettings Uxbridge
Because services have always been reliable and questions are answered and advice given promptly.Ian Macdonald, Macdonald Associates Consultancy
A high level of dedicated personal service and ability to find and recommend solutions and complex questions.Bruce Todd, InCompass International Consultancy Services Ltd.
I have always found Ward Williams team to be responsive and helpful to any questions for advice.Ann Tomsett
We have had a long successful working relationship with Ward Williams over many years.David Warwick, MASDAR (UK) Limited.
Knowledgeable and informative advice. Trustworthy and competent. Very friendly likeable staff. Completely Satisfied.Mrs Ingrid Klinkhamer
I am extremely happy with the service provided and would try to recommend Ward Williams at every opportunity.Michelle McIntyre, Airboe Components Limited.
I have enjoyed a long relationship with Ward Williams and have found you to be very competent at what you do!Bryan Lewis, Media On Demand
To date I have been very satisfied with the service providedDavid Hawkins, Cane Bay PTY Ltd.
Excellent service both personally and as a business.Guy Hewitt, Angelo European Trading (UK) Ltd.
Ward Williams supported my business since shortly after its inception. Phil, Ming and Jamie respond constructively and promptly to any queries that I may have and my dealings with the other staff are always friendly and courteous.Madeline McGill, Senior Executive Selection Coaching & Development Ltd.
Great service from great people. Moving our business to Ward Williams was one of our better decisions.John Yeomans, Champagne Food Ltd.
Friendly, efficient and professional service.Irene Reid, Domains Lettings Ltd.