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Did you know you can show your appreciation to employees with tax-free gifts? Whether it’s a thoughtful gesture to reward hard work or a holiday treat to boost morale, there are plenty of ways to give tax-free gifts that benefit both you and your team. By understanding the rules, you can avoid unnecessary tax obligations while providing meaningful tokens of gratitude.
This guide explains how to navigate the process, from using gift vouchers and trivial benefits to more valuable options. With the right approach, you can delight your team while deducting the costs from your business taxes—a win-win!
Plus, we’ve included practical gift ideas, including sustainable and ethical options, to inspire you. Follow our tips to give gifts that are compliant with HMRC regulations, and learn how to make your employees feel valued without breaking the bank. Let’s get started!
Tax-free vouchers for employees in the UK are a great way to reward your team without incurring additional tax liabilities. These vouchers, often used as part of a company’s benefits package, allow employers to provide meaningful perks while staying compliant with HMRC guidelines.
Under the trivial benefits rules, you can give vouchers as long as they meet specific criteria. To qualify for the trivial benefits exemption, the voucher must:
These vouchers can include a cash voucher (redeemable at various retailers) or pre-paid cards. As long as they are used to provide trivial benefits, such as for celebrations or small gestures of appreciation, they remain tax-free. This approach allows you to reward employees while keeping costs manageable.
You Might Like: 10 Best Office Staff Gifts For Coworkers & Employees
If you're looking to give your employees a little extra something this holiday season, you may be wondering how to do so without incurring a tax bill. The good news is that there are a few ways to give tax-free gifts to employees!
The first way to give tax-free gifts to corporate employees is to utilise gift vouchers. Gift vouchers can be used to purchase a variety of items, including eco-friendly gifts for her, clothing, food, or other experiences. If the value of the voucher is less than £50, then there is no tax charge or liability for the employee.
Another way to gift an employee tax-free is to give them a trivial benefit. A trivial benefit is defined as a benefit that costs less than £50 per employee, is not part of their contractual obligations, and is not provided as part of a salary sacrifice arrangement. Trivial benefits can include things like Christmas parties, tickets to a sports event, or small gifts, like gift cards.
If you're looking to give your employees a more valuable gift, you may be able to do so tax-free as long as the total cost does not exceed £300 per employee during the tax year. If the gift exceeds £300 per employee, it will be subject to a taxable benefit charge.
Gift vouchers are only taxable in the UK if they are part of a salary sacrifice arrangement. A salary sacrifice arrangement is an agreement between an employer and employee to exchange part of their salary for a non-cash benefit, like a voucher.
If you're looking to give your employees gift vouchers as part of a salary sacrifice arrangement, you will need to report the value of the voucher as a taxable benefit on their P11D forms.
If you give your employees gifts or benefits that are subject to tax, you will need to report these on their P11D forms. The P11D form is an annual return that is used to report the value of taxable benefits and expenses that have been provided to an employee during the tax year.
You will also need to deduct any income tax and national insurance that is due on the value of the benefit from your employee's salary. Failure to comply with these reporting obligations can result in a tax charge or penalties from HMRC. In order to successfully comply with obligations from an international workforce you can also hire global tax solutions.
For tasty gift ideas without having to pay tax, take a look at our corporate gifts and gift cards. With a range of tasty, ethical and stylish products on offer, there's something to suit everyone.
Looking for a unique gift that doesn't break the bank? Our personalised gift cards are perfect for employees and clients alike. With a range of designs to choose from, you can add your own special message to make it truly personal. As they are tax-free, you can give as many as you like!
If you're looking for a luxurious gift, our corporate gift hamper range has something for everyone, or a premade employee gift boxes may be just what you're looking for. With a selection of gourmet food and wine hampers, you're sure to find the perfect gift to suit your team. Our corporate gifts include office snacks, luxury treats and more!
If you're looking to send something to your entire team come December we also offer Christmas gift boxes for employees.
Read More: 10 Christmas Gift Ideas For Employees & Colleagues
The Goodness Project is a leading provider of corporate free-from gifts in the UK, with a range of gift ideas to suit every budget. Whether you're looking for a luxury hamper or a simple tax-free gift card, we have something for everyone.
All of our gift vouchers can be gift-wrapped and sent by email, so you can be sure that your employees can receive their vouchers instantly. And with no delivery charges and no hidden fees, buying from us is easy and hassle-free.
Why not take a look at our delicious range of Hampers & Gift Baskets while you’re here? Our snack boxes are perfect for remote employees.
Here are a few frequently asked questions that may help you as you navigate the process of giving tax-free gifts to your employees.
Yes, you can give your employees cash gifts, but there are a few things to keep in mind. First, the gift must be made voluntarily and not in lieu of salary or wages. Second, the gift must not be made as part of a salary sacrifice arrangement. Finally, the total value of cash gifts made to an employee during the tax year must not exceed £300.
No, gift cards do not count as income in the UK, and they are not subject to income tax or national insurance. This is because gift cards are not considered to be salary or wages, and they are not part of a salary sacrifice arrangement.
No, there is no VAT on gift vouchers in the UK. As an employer, you can also claim back any VAT that you have paid on the purchase of gift vouchers.
Christmas vouchers, like other gift vouchers, are only taxable if they are part of a salary sacrifice arrangement. Otherwise, they are not subject to income tax or national insurance.
Remember, when it comes to giving gifts to employees, it's important to understand all the tax implications. If you have any questions about whether a particular gift is taxable, please consult a qualified tax advisor or chartered accountant. Need some inspiration? Check out our Christmas gift ideas for employees
You may be subject to tax exemption if you are looking to give your employees a more valuable gift that exceeds £300 per employee. This means that the value of the gift will be subject to a taxable benefit charge.
A day out may be considered a trivial benefit if the cost is less than £50 per employee and it is not part of their contractual obligations. However, if the cost of the day out exceeds £50 per employee, it may be subject to a taxable benefit charge.
Do you make a conscious effort to shop green and reduce your environmental impact? If so, congrats! You're part of the growing number of people who are doing their part to help our planet. One way to take your eco-friendly shopping up a notch is to purchase reusable accessories.
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