Gift / Bonus To Employee For Christmas

Gift / Bonus To Employee For Christmas

Most of the employers must be looking to give some sort of gifts / bonus to employee for Christmas. There are few gifts which are tax free and employers and employees could take benefit of these rules.

There is no tax to pay on trivial benefits in kind (BIK) provided to employees where all of the following apply:

• the benefit is not cash or a cash-voucher; and
• costs £50 or less; and
• is not provided as part of a salary sacrifice or other contractual arrangement; and
• is not provided in recognition of services performed by the employee as part of their employment, or in anticipation of such services.

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

Normally an employer would use trivial benefits in the following types of expenses:

Buying each employee, a Christmas present; or

Sending flowers.

Please have a look at our Tax planning page for basic advice.

So, for example a turkey that cost £45 would qualify as would a £15 bottle of wine. It is also possible to provide employees with a gift voucher (not a cash-voucher) where the value is £50 or less. It is important to remember that the gifts must not be provided in recognition of the employees’ services but merely as a gesture of goodwill at Christmas.

There is an annual cap for directors of a ‘close’ company of £300 per year. If the Christmas gifts have a value of over £50 or cannot be counted as a trivial benefit then the gift must be reported on form P11D and Class 1A NICs will be payable on the value of the gift.

If you are looking to know about this; feel free to contact us.