Can I Give My Employee a Tax Free Gift?

Image of an employee gift. Could it be a tax free gift?

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 all of the following apply:

  • it is not in cash or a cash voucher,
  • it’s not performance-related,
  • it’s not in the employees contract.

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.

You can provide an employee with a personal gift up to the value of £50 which can be 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.

Other topics to be aware of this time of year include:

If you would like to discuss this topic in further detail, please don’t hesitate to contact us.

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This post was originally published in December 2018 and has been updated for accuracy and comprehensiveness.

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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