Last month we posted an article setting out the limitations of the so-called “trivial gifts” exemption for employees. I have reproduced the text here as this might be a useful way to benefit a client’s employees for Christmas without incurring a tax charge.
A reminder that since 6 April 2016, so-called trivial benefits are exempt from tax as employment income if all the following conditions apply:
- the cost of providing the benefit does not exceed £50 (or the average cost per employee if a benefit is provided to a group of employees and it is impracticable to work out the exact cost per person);
- the benefit is not cash or a cash voucher;
- the employee is not entitled to the benefit as part of any contractual obligation (including under salary sacrifice arrangements); and
- the benefit is not provided in recognition of services performed by the employee as part of their employment duties (or in anticipation of such services).
Where the employer is a small (close) company and the benefit is provided to an individual who is a director or other office holder of the company (or a member of their family or household) the exemption is capped at a total cost of £300 in the tax year.
If any of these conditions are not satisfied then the benefit is taxed in the normal way, subject to any other exemptions or allowable deductions.
The exemption applies equally to benefits provided to the employee or to a member of the employee’s family or household.
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