If you are considering giving a Christmas present to your UK employees then why not consider a Christmas hamper, Christmas turkey or a Christmas shop voucher (non-cash voucher) up to the value of £50.
Since 6 April 2016 non cash vouchers given to employees as a trivial benefit up to the value of £50 are tax free. A Christmas present could come under these trivial benefits rules.
Therefore to make it simple this Christmas please feel free to give all staff a Christmas present e.g. hamper, retail shop voucher, etc up to the value of £50.
Assuming the following conditions are met, no tax or NIC or P11D reporting is required for such trivial benefits.
The benefit must be non-cash or a non-cash voucher.
The cost of providing the benefit must not exceed £50.
It is not provided pursuant to salary sacrifice arrangements or any other contractual obligation, and
It is not provided in recognition of particular services performed by the employee or in anticipation of such services. In essence, is for the goodwill/welfare of the employee rather than reward for services.
E.g. Trivial benefit rules - gift for birthday present, gift for marriage, gift for new baby, Christmas gift, etc.
The business must provide the non-cash gift/ non-cash voucher to the employee. The voucher must be paid for out of the company funds, e.g. company bank account or company credit card.
If the benefit provided exceeds £50 the full benefit is taxable.
All cash payments are salary and are fully taxable.
Please note that the director/employee cannot purchase the voucher themselves and then seek reimbursement from the company.
A £50 cash payment to an employee could cost the employer ~ £80 for a basic rate taxpayer.
The trivial benefit non-cash voucher/present would cost the employer £50 only.
DIRECTORS OF CLOSE COMPANIES – Please note that Directors of ‘close’ companies cannot receive trivial benefits of more than £300 per tax year.