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On the 11th Day of Christmas…

11th Day of ChristmasOn the 11th day of Christmas my employee asked me ….  “Do I have to pay tax on the Christmas hamper you’ve given me?”

A seasonal gift is a great way to reward staff at this time of the year.  Does the employee’s question suggest they are being ungrateful?  No, it’s a sensible question.

Employee benefits, even if they do not take the form of money, are generally taxable unless there is a legal exemption or because the benefit is considered to be trivial. There are however currently no set monetary limits below which benefits are classed as trivial.

HMRC has however provided some guidance for employers who need to make that assessment:

Given the imprecise and informal requirements, employers need to be careful that well intentioned gestures do not land their employees with a tax bill.  Legislation in the Finance Bill 2016 may provide more clarity in the future by introducing a statutory exemption from tax for qualifying trivial benefits in kind costing £50 or less.

Whether generosity comes in the guise of a staff party, presents or seasonal gifts, employers need to recognise the benefit of getting good advice to understand fully the potential tax liabilities.

Contact Details

For more details about the issues in this article please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.

Updated: by FG Solicitors
Call us on:  0808 172 93 22

ON THE 11TH DAY OF CHRISTMAS…

11th Day of ChristmasOn the 11th day of Christmas my employee asked me ….  “Do I have to pay tax on the Christmas hamper you’ve given me?”

A seasonal gift is a great way to reward staff at this time of the year.  Does the employee’s question suggest they are being ungrateful?  No, it’s a sensible question.

Employee benefits, even if they do not take the form of money, are generally taxable unless there is a legal exemption or because the benefit is considered to be trivial. There are however currently no set monetary limits below which benefits are classed as trivial.

HMRC has however provided some guidance for employers who need to make that assessment:

  • Trivial benefits will often, but not always, be perishable and/or consumable.
  • A turkey, an ordinary bottle of wine or a box of chocolates would be trivial; a case of wine or a Christmas hamper would not.
  • Employers are required to make an objective judgment based on “common sense” taking into account the type and value of the benefit.  One bottle of Krug, given the price tag, is unlikely to be trivial; a budget hamper from the local cash and carry may well be viewed differently.

Given the imprecise and informal requirements, employers need to be careful that well intentioned gestures do not land their employees with a tax bill.  Legislation in the Finance Bill 2016 may provide more clarity in the future by introducing a statutory exemption from tax for qualifying trivial benefits in kind costing £50 or less.

Whether generosity comes in the guise of a staff party, presents or seasonal gifts, employers need to recognise the benefit of getting good advice to understand fully the potential tax liabilities.

Contact Details

For more details about the issues in this article please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.