As we approach the end of the year, it’s a time when many businesses will be thinking of making gifts to their employees. It’s a great time to show those who work for you that you care about them and appreciate what they do. The good news is that it’s possible for these gifts to be tax-free!
Under the Trivial Benefit rules, gifts (such as wine or hampers for example) worth up to £50 can be awarded to employees free of tax. There is no limit on the number of items that can be given in a tax year, except for directors or their close family where there is a limit of £300 per year.
Gift vouchers may qualify as a trivial benefit if they are not exchangeable for cash, however gift cards are more likely to meet the criteria. The other key condition is that gifts can’t be a reward for performance or work done - there must be another reason for making the gift.
There are many traditional gift options, but some of these may not be so easy with the increase in remote working, so we’ve included some suggestions with links to websites to save you time. But these are only a few suggestions, there are plenty of other options out there too!
E-Gift Cards An e-gift card is just the same as giving your staff a physical gift card, the only difference is that it will be sent to their email address.
To make a tax-free gift of an e-gift card to an employee, you must follow the below guidance:
- The gift card cannot be worth any more than £50.
- The gift card/voucher cannot be one that can be exchanged for cash.
- It must be a genuine gift - if it is a performance-related reward then it is taxable.
- Why not give your employee a little luxury and send them a White Company e-gift card? You can add your personal message to this card, and it can be set to be delivered on a certain date (ideal for a birthday!)
- If you know they like their wine – why not try a Laithwaites e- gift card?
- Try a B&Q e-gift card – for the DIY enthusiasts!
- If they like their sports and keep fit – try a Sports Direct e-gift card
- Cadbury e-gift card – you can’t usually go wrong with chocolate! Again, you can schedule this to be sent on a specific date.
Useful tip: Tell your staff when you’ve sent them an e-gift card, so that they know when they receive the email that it’s genuine and not spam!
Home office equipmentIn June 2020 the government announced a temporary provision to ensure that the cost of home office equipment purchased by employees as a result of needing to work from home would not attract tax & NIC liabilities if reimbursed by the employer. Further details are shown here.
Although this isn’t exactly a gift in the usual sense, compensating employees for home office equipment costs could be a popular option. The government has confirmed that this temporary provision will be extended to 5 April 2022.
- Must be able to prove that the equipment was obtained for the sole purpose of enabling the employee to work from home due to the current pandemic.
- Must be able to prove that the provision of the equipment would have been exempt from income tax if it had been provided directly to the employee by or on behalf of the employer.
- This is only a temporary tax measure and will finish at the end of the 2021/22 tax year
- Extra Screen
Deliveries to the doorMost retailers offer delivery of gift items. So you could choose an actual gift to be delivered safely to employees working remotely.
Ensure these deliveries fall under the ‘tax-free gift’ category by following the below guidance:
- No more than £50 value per gift.
- The gift cannot be one that can be exchanged for cash.
- Must be a genuine gift – not a reward for performance.
- Interflora is a well known favourite for flower deliveries, and there are some options below £50! (You may need to check availability in your area).
- Amazon have a useful Giftfinder where you can put in personal preferences of who you are buying for and your budget and it will suggest options that may work for them!
- Pizza Hut Get a pizza delivered to the door in time for lunch!
- KFC delivers to the door via Uber Eats, Deliveroo or Just Eat.
- Marks & Spencer offers a range of hampers and gift options under £50.