There is a statutory exemption enabling employers to give their team members a gift without incurring tax charges.
Providing all the following conditions are met the gift will be classified as a ‘trivial benefit’ and will not incur a tax charge for either the employer or the team member:
- The cost of providing the benefit does not exceed £50
- The benefit is not cash or a cash voucher (a gift voucher is acceptable)
- The employee is not entitled to the benefit as part of any contractual obligation or salary sacrifice arrangement
- The benefit is not awarded for recognition of any services performed by the employee (or in anticipation of any such services to be performed)
There is no limit on the number of trivial benefits an employee can receive, except where the benefit is provided to a director or office-holder (or a member of their family or household) of a ‘close company’. In this case an annual cap of £300 per person per tax year applies. Broadly speaking, a close company is one controlled by five of fewer shareholders or a company controlled by any number of shareholders who are also directors.
Employers need to keep records of all trivial benefits given to their team members to demonstrate that the statutory limits have not been exceeded.
If an employer wants to give a gift to a team member which exceeds £50, there are tax implications for both the employer and team member which need to be considered.
How Hallidays can help
If you would like further advice please contact our expert tax team on 0161 476 8276 or email firstname.lastname@example.org.
Posted 25th July 2016
Updated 12th December 2018
The information contained herein is of a general nature and is not intended to be received as formal professional advice. Whilst we endeavour to provide accurate information, there can be no guarantee that the information is accurate as of the date it is received, or that it will continue to be accurate in the future, due to legislative changes. It is therefore important that before you act upon any information contained herein you seek appropriate professional advice to take account of your exact circumstances.