CHRISTMAS GIFTS FOR EMPLOYEES (AS A BUSINESS OWNER)
Gifts that qualify as a legitimate business expense.
The festive season is here once again. If you’re a business owner, Christmas could be a good opportunity to show any employees and directors just how much they are appreciated, by treating them to something. It’s also worth remembering that directors of close companies and personal service companies can also treat themselves to a tax-free Christmas gift, which is known as a trivial benefit.
What is a Trivial Benefit?
HMRC states that you don’t need to pay tax on a gift as long as it meets certain criteria:
- The trivial benefit costs you £50 or less
- The benefit isn’t cash or a cash voucher
- The benefits aren’t a reward for behaviour or performance
- The benefit can’t be part of their contract of employment with you
As long as the above conditions are met, you don’t need to inform HMRC as it won’t count towards your taxable income.
If you are the director of a close company, defined as a limited company that is controlled by five or fewer participators together with their associates or by any number of participatory directors, you cannot receive trivial benefits worth more than £300 in a tax year.
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