Free Christmas Turkey – on the company?

From 6th April 2016 the rules changed relating to small gifts to employees known as “trivial benefits”.  Essentially if your company has at least one employee (including yourself as a director) on a payroll, you can give each employee a gift of up to £50 at any one time which is both tax deductible for the company and not a taxable benefit-in-kind to the employee.  This means you can award yourself a special Christmas gift from the company, such as a Turkey or a fine bottle of wine.  Why not both if the combined cost does not exceed £50?

There are some conditions for this to apply:

  • The gift must not be cash, but can be a voucher (eg £25 M&S gift voucher)
  • The gift must not exceed £50 in total, ex VAT
  • The gift must not be part of an employment contract or for individual work performance
  • If the cost of the gift is over £50 the whole amount is a taxable benefit to the employee
  • For close companies, the maximum “trivial benefits” that can be given to a director is £300 in any one year.

Don’t forget that, in addition to the above tax free “trivial benefits” for staff, companies are also able to deduct staff entertaining (eg Christmas staff parties) as a taxable expense from the company as long as the total expense does not exceed £150 per year per employee (incl VAT). As long as this limit is not exceeded, the employee will not be deemed to have received a taxable benefit.

Tip: Don’t be a Scrooge this Christmas.  Give your employees a Turkey or another (tax deductible) trivial benefit that they will appreciate.  The dividends the good gesture may pay back to you and your business may be huge!

Any questions?  Please get in touch.


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