In general, employers must report gifts made to employees on their annual Benefit-in-Kind Return form P11D, meaning that both the employer and employee usually pay income tax and national insurance on the value of the gift.
However, since 6 April 2016, employers can give tax-free gifts to employees up to the value of £50 without the cost or complication of reporting a Benefit-in-Kind.
Here’s how to stay on the right side of the Trivial Benefits-in-Kind rules:
How to give a tax-free gift
To be treated as a trivial benefit-in-kind, the gift must cost under £50 (inc VAT). If your gift costs £51, then the whole amount will be taxed on the employer and employee as a benefit-in-kind
The gift must be freely given and not as a reward for employee performance (examples include birthday gifts, Christmas presents, for the birth of a new baby, a work or employment start date anniversary, a summer garden party etc.)
Cash or cash vouchers cannot be given, but store / gift vouchers can
Input VAT is not recoverable because of not being given as a reward for employee performance; it is not therefore given in the course of running a VAT’able business
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