I want to raise team morale and treat my staff – are presents for employees tax deductible?

giving employees a gift

Times are hard right now for employees. Everyone’s trying to make it through the fog and adapt as best as possible, while retaining some semblance of sanity! 

Treating your staff can be a good way of raising morale through any hardship. A gift can show you’re thinking about an individual, or can help to bond a team together and make them feel appreciated. But times are tough for you too – and we know you’ll be conscious of where you can make savings. 

Generosity doesn’t mean you can’t make the tax savings you’re entitled to. So here’s all you need to know about the rules regarding staff gifts:

You can make a one off purchase for up to the value of £50 per employee per tax year

This purchase can be put through your expenses as a ‘Trivial Benefit’ and is tax free, but the VAT is reclaimable. 

The gift could be anything from a bunch of flowers, to a birthday present or a staff meal – If you take your staff out for a meal, it’s not expected you’d pay everyone’s bill separately, but you could use up to the value of £50 per employee.

If the total spend goes over £50 per person, none of the cost is allowed to be put through as a trivial benefit.

This cannot be cash or a gift voucher that can be exchanged for money.

Be clear about what doesn’t count as a tax deductible gift

Trivial benefits should NOT be:

  • cash, cheque, bank transfer or added to pay
  • deemed as part payment for work
  • used as an incentive
  • part of a contract of employment

What about gifts for Directors?

Directors are allowed gifts under the same rules, but they are allowed up to the value of £300 per tax year (or 6 benefits of up to £50 each). The value still cannot exceed £50 per gift. Again, If the total spend goes over £50 per person, then none of the cost is allowed to be put through as a trivial benefit.

Members of the director’s household can also receive these gifts, under the same rules.

Your tax questions answered

You’re a busy business owner with a lot on your plate. We don’t expect you to know every tax rule, and sometimes even when you find an answer it can be hard to understand! Any time you have a question, go ahead and check out our blog where we try to answer these kinds of questions in a language we can all understand. Type your issue into the search bar and you’ll see if we’ve covered it. 

Want to know where you can make savings in your business, we can always offer more tailored tax support. Answer this quick diagnostic and PPF will tell you what stage you’re at with your business and tailor our services and updates to suit you!

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