Christmas gifts Benefits of a trivial nature, for example, a seasonal gift of a turkey, box of chocolates at Christmas or an ordinary bottle or two of wine will not normally be charged to tax as a benefit. However, anything more lavish in quality or quantity will be treated as a benefit on which tax is payable. There is no set monetary limit to determine what constitutes a trivial benefit. HMRC adopt a policy of ‘sensible practical administration’, in determining whether to tax a small gift taking account of the: Cost of the gift to each employee and not the overall cost to the employer where a number of employees are concerned; Circumstances and rationale behind the benefit provision, for example, it is not a reward for employee services; and Whether it is ‘reasonable’ for the employer to make individual Form P11D entries and the ‘cost’ of the exercise to HMRC. Cash benefits, benefits with a ‘money’s worth’ (capable of being converted into money) and non-cash vouchers are never treated as ‘trivial’, irrespective of the sum gifted. A ‘Christmas box’ given in cash to an employee is subject to PAYE tax and Class 1 NIC. If the gift consists wholly of goods, such as a food hamper, there is a tax liability (reported on Form P11D or P9D) and a Class 1A NIC liability (P11D employees only). A tax exemption exists for small business gifts, where the cost to the donor is no more than £50 per year for any one recipient. This only applies if the gift carries a conspicuous advertisement for the donor, instantly recognisable as such, like a trademark or logo. The gift must not be food, drink, tobacco products or voucher exchangeable for goods. Therefore, diaries, calendars etc… are items likely to be covered by the exemption. Paul Tew, Pay Magazine Snowdrop provides a range of Payroll solutions that are fast, flexible and easy-to-use, to suit the many and varied needs of each organisation. To find out more about the software and services that we provide, please click here >>