Tax on Staff Christmas Gifts

I’m looking at what to order for my employees for their Christmas presents. Is there any advice you have for me? I don’t want my employees to pay tax or National Insurance on their gifts- or the hassle of any extra admin!

1st November 2014

If you buy your employees a seasonal gift such as a joint of meat or a box of chocolates, then this would be deemed ‘trivial’ and therefore, there are no reporting requirements and nor would any tax or National Insurance be triggered.

However, if your gifts are more lavish than the examples above- say a hamper, case of wine or vouchers - then the cash equivalent must be taxed via the payroll, form P11D or a Pay As You Earn Settlement Agreement (PSA). With the first two options, tax and National Insurance will be triggered and will be deducted from the employee. However, with a PSA the employer agrees to settle their liability.

Gifts and entertaining is a complex area, as it can have multitude of tax, National Insurance and VAT implications. Please feel free to contact your local TaxAssist Accountant if you would like to discuss this further.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. 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 information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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