Let’s get in to the Christmas spirit by thinking about gifts for staff, (but also the tax status of them) Christmas gifts be tax free if structured correctly.
Ever since April 2016 employers are allowed to provide their directors and employees with certain “trivial” benefits in kind tax free.
What are the taxman’s rules?
The rules were brought in as a simplification measure so that certain benefits in kind do not now need to be reported to HMRC, as well as being tax free for the employee. There are two different considerations, staff bonus and staff welfare.
How the exemptions for Staff Bonus Conditions apply
- There are of course a number of conditions that need to be satisfied to qualify for the exemption.
- Conditions for the exemption to apply.
- The cost of providing the benefit does not exceed £50
- The benefit is not cash or cash voucher
- The employee is not entitled to the benefit as part of any contractual obligation such as a salary sacrifice scheme
- The benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services)
Staff Welfare Exemptions
This exemption will generally apply to small gifts to staff at Christmas, on their birthday, or other occasions and includes gifts of food, wine or store vouchers.
Please note that where the employer is a “close” company and the benefit is provided to an individual who is a director or other office holder of the company, the exemption is capped at a total cost of £300 for the tax year.
If you are considering taking advantage of this exemption please feel free to contact us. Alan Patient & Co specialise in helping companies, and schools, to improve what they get out of their business and help you achieve your business dreams. Please email to firstname.lastname@example.org your first Consultation is free
Wishing you and your staff a Happy Christmas