Can an Employer Give an Employee a Tax Free Gift?

Staff Christmas bonus - tax rules

And a Partridge in a Pear Tree?

Christmas is all about giving, so you might like to take the opportunity of giving a gift to your employees or your customers. In many cases, however, gifts are not tax-free.

A Christmas Bonus to staff members is treated as additional pay for tax purposes and will attract Income Tax and National Insurance under PAYE. However, you can provide an employee with a personal gift up to the value of £50 which can be tax-free under the Trivial Benefits exemption introduced in 2016, provided it is not in cash and is not performance-related.

Any gifts given to your employees from third parties (up to the value of £250 including VAT) do not need to be accounted for and are therefore tax-free.

Gifts to customers must be given with the aim of promoting or furthering your business if you want to claim tax relief on the cost. As such, they must display a clear advertisement, and cost less than £50 per individual. Food, drink, tobacco and gift vouchers are excluded and are not tax deductible.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

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