Tax Free Christmas Giving

tax deductible christmas present

Tax Free Christmas Giving

In our November newsletter we shared with you how HMRC allows you to claim corporation tax relief on the costs of your Christmas Party. If you happened to miss you can find it here.

But what if you want to do a little more and provide your hard working team members with a little something as a token of your appreciation this Christmas?  Well, you can… and what’s more, it’s another tax deductible expense 🙂

HMRC refers to ‘trivial benefits’ when talking of certain statutory exemptions that do enable the giving of a tax free gift to team members, and as ever there are conditions which have to be met in order to comply and be able to claim your tax relief.  It is also important for your employees that you adhere to these regulations or conditions, as otherwise your gifts could be treated by HMRC as ‘benefits in kind’ meaning that you would have to complete and submit  P11D forms for each employee in receipt such benefits and your employees would have to pay tax on the value of the benefit received.

You can read more about the payrolling of benefits and expenses on HMRC’s website here

Simply put however, a gift can be classed as a trivial benefit so long as it meets ALL of the following conditions:

  • it cost you £50 or less to provide
  • it isn’t cash or a cash voucher
  • it isn’t a reward for their work or performance
  • it isn’t in the terms of their contract

Importantly there is no limit on the number of trivial benefits that an employee can receive. The company needs to keep accurate records of trivial benefits given to team members in case of enquiry.

The exception to this rule is that directors of close companies and their connected parties to the company have an annual limit of £300 per person per tax year.

As ever we would recommend a conversation with us to ensure that you are going through these opportunities correctly if you are thinking of looking at making tax-free cash to your team in this way.

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