Are Christmas gifts from customers allowed?

Gifts may be received by your employees from third parties such as customers or suppliers, due to relationships they may have built throughout the year.

Small gifts of goods made by third parties to employees (or a member of their family or household) are exempt from tax if the following conditions are met:

• The gift is not from the employer or a person connected with the employer
• The employer did not buy the gift directly or indirectly
• The gift is not for services performed by the employee
• The gift is not cash, vouchers or securities that can be converted into cash
• The total cost to the donor does not exceed £250 (when added to any other gifts they have given that employee within the tax year)
• The cost to the person making the gift includes any VAT paid, whether it is reclaimable or not

Where the cost of a gift (or gifts) to an employee received from the same customer or supplier in a tax year exceeds £250, tax will be payable on the full amount of the gifts.

If you know your staff will receive gifts, it’s worth finding out what implications there will be in advance, so please contact us on 01535 601199 or use our simple online contact form to arrange a free initial consultation.

Last updated 26 Nov 2020 | First published 30 Oct 2019

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This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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