Tax-free gifts to employees

Over the festive period some employers may show their appreciation of hard working employees by giving them a small gift. If the employer meets the relevant conditions, a tax charge won’t arise on the employee.

A tax exemption is available which should help employers ensure that the benefits provided are exempt and do not result in a reportable employee benefit in kind. For the benefit to be exempt it must satisfy the following conditions:

  • the cost of providing the benefit does not exceed £50 per employee (or on average when gifts made to multiple employees)
  • the benefit is not cash or a cash voucher
  • the employee is not entitled to the benefit as part of a contractual arrangement (including salary sacrifice)
  • the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties
  • where the employer is a 'close' company and the benefit is provided to an individual who is a director, an office holder or a member of their household or their family, then the exemption is capped at a total cost of £300 in a tax year.

If any of these conditions are not met, then the benefit will be taxed in the normal way, subject to any other exemptions or allowable deductions.

No more than £50

One of the main conditions is that the cost of the benefit does not exceed £50. If the cost is above £50 the full amount is taxable (not just the excess over £50). The cost of providing the benefit to each employee and not the overall cost to the employer determines whether the benefit can be treated as a trivial benefit. So, a benefit costing up to £50 per employee whether provided to one or more employees can be treated as trivial. Where the individual cost for each employee cannot be established, an average should be used.

You can find more information on how the exemption will work (including family member situations) in the HMRC manual.

If you are unsure on the tax treatment for the gifts you will being providing your employees, please contact:

Tim Baker
Payroll & HR Senior Manager
Tel: +44 (0)20 3667 5971
Email: tbaker@fitzandlaw.com

As seen in


AA.png TFT.png CNN.png RAC.png ECO.png SU.png EMM.png TCN.png

Awards & Associations Legal GDPR & IT Compliance Website Privacy Policy Copyright Sitemap

© 2019 Fitzgerald & Law. All rights reserved. Incorporated In England and Wales. Company No: OC300023.


We have placed cookies on your device to give you the best experience. Find out more here, including how to change your cookie settings.
If you continue to browse on this site, we’ll assume you’re OK to proceed.