Those thinking about making gifts at Christmas should take advantage of the various inheritance tax (IHT) exemptions and reliefs available. There are also certain gifts which have capital gains tax (CGT) implications too.
In this series of articles, brought to you by Beavis Morgan, we look at the various options available to you.
Gifts of up to £50 to employees
From April 2016, new rules were introduced to allow employers to provide their directors and employees with certain “trivial” benefits in kind tax free.
The new rules were brought in as a simplification measure so that certain benefits in kind do not now need to be reported to HMRC as well as being tax free for the employee. There are of course a number of conditions that need to be satisfied to qualify for the exemption.
Conditions for the exemption to apply:
- the cost of providing the benefit does not exceed £50
- the benefit is not cash or a cash voucher
- the employee is not entitled to the benefit as part of any contractual obligation such as a salary sacrifice scheme
- the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services)
So this exemption will generally apply to small gifts to staff at Christmas, on their birthday, or other occasions and includes gifts of food, wine, or store vouchers.
Note that where the employer is a “close” company and the benefit is provided to an individual who is a director or other office holder of the company the exemption is capped at a total cost of £300 in the tax year.
Please feel free to contact us if you are considering taking advantage of this exemption. Our tax specialists at Beavis Morgan are available to assist you in keeping the necessary records to satisfy HM Revenue & Customs.
For more information, please contact your usual Beavis Morgan Partner.
Other articles in the series:
The IHT annual exemption – use it or lose it!