• John Massey

Gifts to employees - that don’t attract tax 🤫

In general employers must report gifts made to employees on their annual Benefit-in-Kind Return form P11D meaning that both the employer and employee usually pay income tax and national insurance on the value of the gift.


However since 6 April 2016 employers are able to give tax free gifts to employees up to the value of £50 without the cost or complication of reporting a Benefit-in-Kind.


Here’s how to stay on the right side of the Trivial Benefits-in-Kind rules:


How to give a tax free gift

  • To be treated as a trivial benefit-in-kind the gift must cost under £50 (inc VAT). If your gift costs £51 then the whole amount will be taxed on the employer and employee as a benefit-in-kind

  • The gift must be freely given and not as a reward for employee performance (examples include birthday gifts, Christmas presents, a gift on the birth of a new baby, a work or employment start date anniversary, the cost of a summer garden party etc)

  • Cash or cash vouchers cannot be given, but store / gift vouchers can be given

  • Input VAT is not recoverable because of not being given as a reward for employee performance; it is not therefore given in the course of running a VAT’able business


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


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