Trivial Benefits In Kind What you need to know

As an employer there are occasions where you might buy an employee a small gift, but how should these be treated for tax purposes?

If the gift is small, under £50 including VAT, it will be exempt from tax and NIC. But be aware of the conditions:

  • The gift (benefit) can’t be cash or vouchers which can be exchanged for cash.
  • It can’t be over £50 including vat.
  • It can’t be for services provided in the form of a thank you or bonus.
  • It can’t be connected to any relevant salary sacrifice or contractual arrangement.
  • If paying to a director of a close company the benefit is capped at £300 per year.

It is not limited to one benefit a year but can’t be a regular occurrence such as gym membership.

So suitable occasions might be a birthday, a religious event such as Christmas, a special event personal to the employee such as a wedding or anniversary. But remember to keep each gift to £50 or under including vat.

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