It’s Christmas time again and some employers may be providing their staff with a Christmas bonus, a seasonal gift or a Christmas party.
If a gift is given, you need to consider whether the item can be resold or exchanged for cash by the employee or if it is considered as trivial and therefore tax exempt. There are no set rules for determining which Christmas benefits are trivial, but a value of up to £50.00 is usually considered appropriate. Christmas gifts such as a turkey, bottle of wine or a box of chocolates can be treated as trivial benefits. Cash benefits, benefits with a money’s worth and non-cash vouchers, such as shopping vouchers are not regarded as trivial by HMRC. Cash bonuses count as earnings and are added to the normal employee earnings for tax and National Insurance.
Small third party gifts may also be tax exempt if they are not provided by the employer; it is not in recognition of the service performed by the employee; it is not cash or vouchers that can be converted to cash, and it is does not exceed £250.00.
There are exemptions for employers providing parties for employees as long as they are an annual event; it is open to all employees and the cost per head is not more than £150.00.
