Gifts for Employees: the Tax Position

1st Feb 2018

One of the questions we are sometimes asked is whether buying Christmas gifts for staff would trigger some sort of tax liability for them of for you as the employer. Obviously you should rely on your own advisors on this, but here is what we’ve learned on the subject.

Basically, the situation is that there is no tax liability for either, so long as certain conditions prevail. And it doesn’t matter whether it’s Christmas or for any other occasion. The HMRC website says the following:

You don’t have to pay tax on a benefit for your employee if all of the following apply:

  • it cost you £50 or less to provide
  • it isn’t cash or a cash voucher
  • it isn’t a reward for their work or performance
  • it isn’t in the terms of their contract
    This is known as a ‘trivial benefit’. You don’t need to pay tax or National Insurance or let HM Revenue and Customs (HMRC) know.

You have to pay tax on any benefits that don’t meet all these criteria.”

Additional guidance suggests that the £50 needs to include VAT and delivery costs where applicable.

Our prices are shown online excluding VAT, so as a general rule of thumb, if you're looking to have gifts delivered to your staff individually at their homes, for example, if you stick to anything priced £34 or less on the website, you'll be within the guidlines. For deliveries in bulk to work locations, you can go higher to around £40 or less.

Anything in this category would fall within regulations as long as the gifts are delivered within the UK, and most of the gifts in this category would too.

What can be a ‘trivial benefit’ to HMRC, of course, can be anything but to the employee concerned. A gift they’re not contracted to receive can provide tangible recognition, give them something to share with the family, improve the image of the company with employees, and help improve retention of key staff. 

Cocoon has been providing thoughtful and creative gifts for employees for many years, for less well-known companies and for household names, nearly all of at less than £50.  Here are some current examples of our range which come within the £50 maximum spend, including VAT and delivery within the UK:

  • The Luxury Basket - a real treat for those that appreciate great food and drink. With a bottle of bubbles, chocolates, luxury fudge, handmade cookies and some savoury bits to nibble on, it's a great hamper that will suit everyone whatever time of year
  • A Little Thank You Hamper - one of our all year round best sellers, this selection of a full sized bottle of wine alongside savoury and sweet treats is a great value goft and the ideal way to say a little thank you to staff.

 Of course, if you're looking for something to use all the available budget, we're always on hand to put together gifts to fit your exact requirements - just give us a call on 01604 780101, or brief us online.

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