Trivial Benefits: Tax-Free Gifts for Employees (and Directors) 🤫

Giving your team a thoughtful gift? 🎁 It might come with a tax bill… unless you know the rules.

Normally, gifts to employees must be reported on form P11D, meaning both employer and employee pay tax and NI on the value.

However, 2016 saw the introduction of the Trivial Benefits rule. This allows you to give small gifts, costing up to £50 completely tax-free. No forms, no fuss.

How to give a tax-free gift

• The gift must cost £50 or less (inc VAT). £51 makes the whole thing taxable

  
  

• It must be freely given; not a reward for work done / performance.

  
  

• Cash and cash vouchers ❌ are not allowed — but store gift vouchers ✅ are.

  
  

• Input VAT can’t be reclaimed (because "freely-given" means its technically not a business expense).

Gift examples 🎁

✅ Christmas/birthday/new baby/work anniversary present <£50

✅ Store / online shopping voucher up to £50

❌ Cash gift of £20

❌ Any gift with a note "great work/sales pitch" etc

💡 Tax tip: Directors are usually employees are eligible to receive the occasional tax-free gift too. However, the criteria is a little stricter - so get in-touch if you're thinking about this.

Source info: https://www.gov.uk/expenses-and-benefits-trivial-benefits

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