It’s the time of year when you may be looking to reward your hard working staff with a seasonal gift, (gin is always gratefully received here at Autumn Cottage), but what about the tax implications?
Such gifts are likely to be considered as trivial benefits in kind, and therefore no tax would be due, as long as the following criteria is met:
- it cost £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 part of a salary sacrifice arrangement;
- it isn’t in the terms of their contract.
There is, however, an annual limit of £300 in any tax year if you are the director of a ‘close’ company – this being a limited company run by 5 or fewer shareholders.
If you are feeing extra generous and provide your employees with gifts with a value in excess of £50, this must be reported on form P11d and will be liable to Class 1 National Insurance Contributions.