Are Christmas gifts from customers allowed?

With Christmas coming up my staff tend to receive gifts from our customers, for example one of my senior staff members has already received a luxury hamper from one of our clients. Are there any implications for this?

1st November 2019

Gifts may be received by your employees from third parties such as customers or suppliers, due to contact they may have had with 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 provided by the employer, or a person connected with the employer
  • Neither the employer, nor a person connected with the employer, directly or indirectly bought the gift
  • The gift is not made in recognition, or in anticipation, of particular services performed by the employee
  • The gift is not in cash or in vouchers or securities that can be converted into cash
  • The total cost to the donor of all eligible gifts to the employee in a tax year does not exceed £250.
  • The cost to the person making the gift includes any VAT paid, whether or not it is reclaimable.

Where the cost of a gift (or gifts) to an employee received from the same third party 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 0800 0523 555 or use our simple online contact form to arrange a free initial consultation.

By Samantha Skyring FCCA

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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