Christmas gifts to employees

With Lymington High Street sparkling with enticing gifts for the festive season, here's the lowdown on Christmas gifts for staff and customers from a tax perspective...

xmas gift2Gifts to Staff

Christmas presents paid in cash to employees will always be taxable along with other earnings. The same treatment also extends to vouchers that can be spent in either one or a number of different shops of the employee's choice. The employee has to pay tax on the full value of the voucher. 

If employees are given a seasonal present, such as a turkey, an 'ordinary' bottle of wine or a box of chocolates, as long as the cost is reasonable, HM Revenue & Customs (HMRC) won't seek to tax it. 

Employers may find the following Revenue concession useful - we have copied the note directly from the HMRC handbook: "An employer may provide employees with a seasonal gift, such as a turkey, an ordinary bottle of wine or a box of chocolates at Christmas. All of these gifts are considered to be trivial and as such are not taxable. For an employer with a large number of employees the total cost of providing a gift to each employee may be considerable, but where the gift to each employee is a trivial benefit, this principle applies regardless of the total cost to the employer and the number of employees concerned." 

Unfortunately, HMRC will not tell us what monetary limit it considers as 'trivial' but in our experience, less than £50 a head is usually acceptable. If the value of the gift is more than this, it will be taxable and should be included on the employee's P11D, or on the PSA, as above. This concession also applies to seasonal flu jabs which are also considered trivial but your employees may not be quite so appreciative of the “gift”!

 

Christmas Bonus for staff

This will count as ordinary earnings and be subject to PAYE and NI as if it were additional salary.

 

‘Small' gifts from third parties

It is worth noting that gifts can also often be received by your employees from third parties due to contact they may have had with throughout the year as a result of their employment. As long as such gifts do not exceed £250 in cost, it won't be taxable for the employee. 

xmas gifts3 

Gifts to customers

Gifts to customers are only allowable as a tax deduction if:

  • the total cost of gifts to any one individual per annum does not exceed £50 and
  • the gift bears a conspicuous advert for the business and
  • the gift is not food, drink, tobacco or exchangeable vouchers.

However samples of a trader’s product are allowable even if they are food, drink or tobacco.

 

VAT

One final cautionary note regarding VAT and staff gifts; VAT is chargeable by the employer when an employee receives gifts totalling more than £50 in a year.

 

For more information and to organise your FREE Initial consultation, contact New Forest Tax Accountants on This email address is being protected from spambots. You need JavaScript enabled to view it. or 01590 688838. To receive the latest in tax and business news and advice register online to receive their monthly eNewsletter at www.newforesttax.co.uk.

 

© New Forest Tax Accountants

Disclaimer: The information above does not constitute individual advice. New Forest Tax Accountants will not accept any responsibility decisions taken or not taken on the basis of the information above. Any reference to legislation and tax is based on our understanding of U.K. Law and HMRC practice at the date of publication of this Tax Guidance Note. Specific advice should always be obtained prior to taking or not taking any actions.

Recent News

Lymington's Ocean Brothers poised to start their t...
12 Jan 2018

Lymington's Ocean Brothers poised to start their transatlantic row. Bartley Marketing will help you follow the brothers' progress across the Atlantic. Due to a weather front approaching the Canary Islands, the brothers have been advised to delay th [ ... ]

NEWS
thesis sponsorship of val sesto Thesis supports Lymington-based international ultr...
11 Jan 2018

Thesis sponsors popular Lymington-based athlete Vale Thesis Asset Management in Lymington is sponsoring international ultra marathon runner Valeria Sesto Which is a win-win we hope for Valeria (known to her many friends as Vale) who does  [ ... ]

NEWS
Local online advertising and webpage special offer...
11 Jan 2018

 Lymington.com local advertising and promotion. 2018 special membership offer for local online advertising.  Currently when you sign up for Business Membership you will get all of this: Individual business web page 
+
Advertising in [ ... ]

NEWS
Former panto dame Stanley Crowe meets performers from Carousel Theatre at Colten Care’s Woodpeckers Christmas at Colten Care Homes - Carols and Pantom...
27 Dec 2017

Christmas at Colten Care Homes - Carols and Cinderella Candlelit Carols at Linden House and Cinderella at Woodpeckers Residents at Colten Care homes in Lymington and Brockenhurst were busy before Christmas, gathering together to enjoy professi [ ... ]

NEWS
Go to top