November is here, so brace yourself for a sudden wave of Christmas-related adverts/ activities/ products – and of course the obligatory annual blogs about Christmas!

Now, we appreciate that you probably haven’t thought that much about a suitable gift for your staff members, but we thought it would be a good idea to raise the potential pitfalls that we see clients fall into when purchasing gifts at this time of year.

The first thing to note is that HMRC’s general rule is that unless a gift is covered by one of their exemptions, all gifts must be treated as additional taxable income on the employee (you may have heard of this as a “benefit-in-kind”).

So, it is important to make sure that any gifts you make to employees fall within HMRC’s exemptions. If they don’t, what started off as a nice idea on your part could result in additional taxes owed both by yourself and the employee in question – and also increase your administrative burden!

What are the exemptions I hear you ask?

TRIVIAL BENEFITS
As we outlined last year, from April 2016 HMRC made this whole area much smoother by introducing the idea of a “Trivial benefit”. This means that as long as a particular gift is below £50, not made in cash and is not contractual or related to a reward for performance at work – this gift is classed as “trivial” and HMRC does not expect to claw the tax back.

What may have slipped under the radar is what constitutes a “cash” gift.

NON-CASH VOUCHERS
You may have naturally assumed that a high street voucher would class as a cash gift in HMRC’s eyes. In fact, HMRC’s guidance seems to hold that the opposite is true and that conventional retail vouchers can be classed as a “non-cash” gift, allowing it to fall within the trivial benefits discussed above.

So, as long as a voucher cannot be directly exchanged for cash, it will class as a non-cash voucher and should be safe to provide as a Christmas gift (as long as you also follow the other trivial benefit rules).

This guidance also holds for the rest of the year (so can include other non-work related celebrations, such as birthdays). The only limit that you will need to be aware of is that there is a cap on gifts that can be given to directors or their spouses, standing at £300 worth of Trivial Benefits per year (i.e not more than £50 each).

So go ahead, as long as you follow the above rules you won’t need to worry about falling into a tax pitfall whilst trying to treat your employees.

If you are a client and you’d like to find out more about the type of gifts you can give to your staff please call 01872 300232 or email us at hello@hivebusiness.co.uk.