With Christmas fast approaching, you may be looking to provide gifts for your staff. So, what do business owners need to consider from a tax perspective?
What gifts are tax exempt?
As long as certain criteria is met, certain gifts are exempt from any taxation. This will avoid the need to report them as a taxable benefit in kind. In order for the benefit to be exempt it must encompass the following conditions:
- The cost of providing the benefit does not exceed £50 per employee (or on average when gifts are made to multiple employees). The full amount becomes taxable if the cost is above £50, not just the excess over £50
- The benefit is not cash or a cash voucher
- The benefit is not provided in recognition of particular services performed by the employee as part of their employment duties
- The employee is not entitled to the benefit as part of a contractual arrangement (including salary sacrifice)
- 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
Talk to us
If you would like more information or any advice on how to avoid tax exposure when giving gifts to your employees, or for any other tax-related matters, get in touch on 01788 539000 or 0116 261 0061.