If you provide your employees with vouchers that can only be exchanged for goods or services, the value for tax and National Insurance purposes is generally the cost to you as the employer, but it can include other associated costs such as costs of selecting the store or other “after sales” expenses.
But in your case, £40 will be the value to use. You will need to include this as earnings for Class 1 National Insurance purposes in the pay period in which the employees receive the vouchers- not when you pay for them. If they earn in excess of £8,500 per annum or they are a director (regardless of their salary), you will then also need to include the cost of the vouchers on forms P9D or P11D for tax purposes.
Needless to say, you should really warn your employees of the tax and National Insurance liability arising on these gifts. HMRC are likely to look to collect it via their tax code, so they may see their monthly deductions from their pay packet increase.
Alternatively, you can pay for their tax liabilities using a PAYE Settlement Agreement (PSA). This would also avoid the need to declare the vouchers on forms P9D or P11D.
If you would like to discuss your staff gifts further, please feel free to contact your local TaxAssist Accountant.