Christmas is coming - can I make gifts to staff?
Updated: Nov 26, 2021
Here's a recap on 'trivial benefits' ahead of party season!
As an employer you'll want to be aware of the tax treatment of gifts and other seasonal benefits for you and your employees. The good news is there are ways you can say thank you to your staff without any tax impact for you or them - great news! 🎉
You don’t have to pay tax on a benefit for your employees (including limited company Directors) if all of the following apply:
it cost you £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 in the terms of their contract
This is known as a ‘trivial benefit’. You don’t need to pay tax or National Insurance or even let HM Revenue and Customs (HMRC) know.
Small gifts (<£50) e.g. flowers 💐 on the birth of a new baby, a bottle of wine 🍾 to celebrate a significant birthday or anniversary or a turkey 🍗 for Christmas
Taking the team out for Christmas dinner - as long as the total costs comes in at less than £50 per employee
Note though that as soon as the gift amount exceeds £50 - even by a small margin, the whole value of the gift becomes taxable, not just the excess!
Christmas (or Summer!) Parties
If you are an employer (so not a sole trader), you can hold an annual party 🎉🎈🎵 for your employees (Limited Company Directors included) exempt from tax and national insurance. This is on top of the trivial benefits allowance described above. There are strict rules, the event must be:
£150 or less per head
annual, such as a Christmas party or summer barbecue
open to all your employees
You can also claim an additional £150 per person for a plus one for each employee, providing they are a family member or partner 👭👫👬
Directors of Close Companies
If you are a Director of a Limited Company with 5 or fewer shareholders who are all Directors, you cant receive trivial benefits totalling more than £300 in any one year. Each individual benefit must still be less than £50.
The Trivial Benefits rules above do not apply when salary sacrifice arrangements are in place for the benefit received. Benefits provided via salary sacrifice need to be reported on form P11D at whichever amount is higher:
the salary given up
how much you paid for the trivial benefits
The information contained within in this article is provided for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice specific to your own circumstances from your own adviser.