Whilst we’ve done everything we can to ensure the information in this article is accurate and complete, please don’t treat it as professional legal or tax advice. You must always seek your own professional guidance if you are in any doubt about your specific situation.
Now for the good news...
Say hurrah as almost all the gifts we sell fall within the threshold for HMRC's trivial benefits treatment. This means that they don’t attract Benefit in Kind tax or National Insurance costs for either the employer or the employee. High fives all-round 🙌.
In real terms, this means purchasing staff gifts rarely incurs any additional or ‘hidden’ costs. For example, if staff gifting didn’t fall within the threshold mentioned above, a gift costing £50 would incur tax and NI additions that could add a further £48 on top of the price of the original gift - that’s a doozy of a saving and means your budget isn’t getting swallowed up by things that don’t put smiles on faces. 😀
What’s the catch?
Whilst it may seem a little too good to be true, there really aren’t any nasty surprises lurking in the small print. That being said, for the gift to fall within the trivial benefits threshold, there are a few things to keep in mind:
1. The gift cannot be cash or a cash voucher (don’t worry, gift cards are ok; see below) 💷
2. The gift must not be mentioned in the terms of the employee’s contract 📝
3. The gift must not be in return for work or performance. i.e Trivial benefits cannot be given as a bonus 🧑💻
4. The value of the gift must be no greater than £50 per person per instance (inclusive of VAT) 💰
5. For directors of ‘closed companies’, gifts must not exceed £300 in aggregate, per year 💰💰
What was that about gift cards?
Yep, you heard it right, HMRC doesn't treat gift cards as cash. This is because they are locked 🔐 to being spent at a particular retailer. So, providing the above conditions are met, gift cards are treated as a trivial benefit and therefore don’t incur BIK tax or NI, just like our other gifts 😎.
Don’t just take our word for it
We understand that you may want some extra assurances (heck, we encourage it!) so you can find some more information straight from the horse’s mouth at these links:
The official webpage from HMRC regarding tax on trivial benefits can be found 👉 here
A super helpful webinar from HMRC with a lot more information regarding this subject can be watched 👉 here. Gift cards are covered at the 11 minute mark but we recommend watching the whole thing. Go on, you’ll only have to watch it once.
See, that wasn’t too bad was it? Whilst tax isn’t likely to be the hot topic of conversation at your next social, at least you’re now armed to answer questions from the Accounts team. Wait for the look on their faces when you drop the line about “trivial benefit treatment”. 🖐🎤
Check out some of our great Christmas gifting options