Tax free gifts for your employees

Tax free gifts for your employees

Treating your employees to gifts is a great way to boost morale and productivity in the workplace.

However, this can, of course, come at a cost to you with many perks being subject to tax – but there is the option to provide treats that are tax free.

Trivial benefits
Unlike some company benefits, such as company cars or medical insurance, trivial benefits do not attract tax or National Insurance (NI) contributions and you won’t need to inform HMRC about them.

They could be something like a bottle of wine or chocolate, evening drinks after work, a birthday present or an Easter egg for example.

Trivial benefits are just small gestures so only count if it:

• doesn’t cost you more than £50
• isn’t cash or a cash voucher
• is not a reward for their work
• isn’t included in their contract

If these rules are broken then it won’t count as a trivial benefit and will therefore be subject to tax which means you’ll need to report them to HMRC via a P11D form – you can read more about this on our What is a P11D? page.

If you are a director of a ‘close’ company (a limited company run by five or fewer shareholders) then you cannot receive more than £300 in a tax year in trivial benefits.

Expenses
Being able to claim certain expenses is another way to treat your employees while making it tax free for you.

For example, staff parties are exempt from tax and National Insurance, just as long as certain conditions are met.

A party could be any annual event, whether that’s a summer barbeque or a Christmas bash, just as long as it costs £150 (or less) per person and is open to all of your employees.

You also need to ensure that:

• the £150 is an exemption and not an allowance – money needs to be physically spent for you to be able to claim the tax relief.
• expenses that are exempt from tax and NI relate to the entire event, so this means any transport, entertainment, accommodation and food and drink are all included.
• if you only have one employee in the company and that person is you, then you can still benefit from the exemption.
• if your company has different departments, you would be allowed to put on separate parties just as long as all of your employees are invited to one of them.
• if you hire any self-employed workers, the cost of their attendance does not count as being exempt. It’s aimed at employees only.

For more information on this, take a look at our Can I claim for a Christmas Party? page.

We hope you found this page helpful. If you’d like to sign up or need any further information, please give us a call on 01442 795 100 or you can email sophie.lewis@dolanaccountancy.com. Alternatively, contact us via live chat.