06 December
By Victoria Wainwright
Categories: HMRC/Industry News

The season of giving?

With the season of goodwill now firmly upon us, you may be thinking about getting into the festive spirit by providing your staff with a Christmas gift to kick start their celebrations. But, are the use of small value benefits in kind really as simple as they sound?

Here, our Tax expert Chris Gumbley makes the tax implications clearer for you and your business.

As an employer providing gifts to your employees, you have certain tax, National Insurance and reporting obligations to fulfil and there are different rules depending on the type of gift you give.

The ‘Trivial Benefits’ rules were introduced for the 2016-17 tax year and onwards. The rules, in general terms, stipulate that no income tax charge arises on a benefit provided to an employee (or a member of their family or household) if four conditions are met:

  • The benefit is not cash or a cash voucher
  • The cost of providing the benefit does not exceed £50
  • The benefit is not provided as a result of a salary sacrifice arrangement
  • The benefit is not provided in recognition of services provided by the employee or in anticipation of such services.

However, our tax partner Chris Gumbley urges, “The rules are not quite as simple as they sound. You must be mindful that the rules are really in place to cover one-off gifts at say, Christmas or birthdays and not if the trivial benefit is in recognition of services provided by the employee.”

A trivial benefit at this time of year could be that of a turkey centre piece for the Christmas dinner table or a festive food hamper to enjoy but please bear in mind the fourth condition of the ‘trivial benefit’ rules which requires very careful consideration.  If gifts are provided to employees so regularly that they have an expectation to receive them, then HMRC may view them as taxable for services rendered.

As an employer, there may also be potential employment law implications that you may wish to consider.

Please do not hesitate to contact us if you require any assistance on your particular circumstances.