What do employers need to be aware of when it comes to providing their employees with gifts over the festive period? In this short article, I hope to shed some light on the key things you need to be aware of, so you can ‘jingle all the way’ into the festive season.
Give a gift this Christmas
If employers wish to provide a gift to their employees to celebrate the festivities, then utilising the trivial benefit tax exemption may be for you. This exemption is specified at section 323a of ITEPA 2003.
There are four conditions that must be met for the exemption to apply. These conditions are:
• the benefit isn’t cash or a cash voucher
• the cost of the benefit doesn’t exceed £50
• the benefit isn’t provided as part of any contractual obligation (including under salary sacrifice arrangements)
• the benefit isn’t provided in recognition of services performed, or anticipated to be performed, by the employee.
There is no limit on the number of trivial benefits provided to employees throughout the tax year. Typically, the benefit would be triggered by an event such as a birthday, Christmas or the birth of a child. However, for directors of ‘close’ companies, the rules are slightly different, in that they can’t receive trivial benefits of more than £300 in a tax year. Please be mindful that you cannot split a gift exceeding £50 into smaller gifts to attempt to meet the exemption.
By using the trivial benefit exemption, you could provide your employees with a turkey ready for Christmas dinner, a gift hamper, bottles of wine or a magazine subscription. The possibilities are endless, providing you meet the above four conditions.
I hope this has provided some clarity around providing gifts to your employees this festive season. From everyone at the CIPP, Merry Christmas, and have a Happy New Year!