It may be October but it’s not too early to plan for Christmas, and this year even HMRC seem to be getting into the Christmas spirit. Most people are familiar with the tax relief for Christmas parties but few may be aware of a new relief for staff benefits which was introduced from April this year. Briefly, where an employer provides a trivial benefit for an employee – be it a bottle of wine, a hamper or a gift voucher – there is no tax charge for the employee, and the employer can claim tax relief for the cost of the gift.
How the relief works
Where the relief applies, the cost of the staff benefit is deductible from the employer’s profits, saving them corporation tax (companies) or Income Tax and NICs (sole traders and partners); and there is no charge to Income Tax or NICs for the employee.
Where the relief applies
The relief is for a trivial benefit, being a benefit where all of the following conditions are met:
- the benefit is not cash (note: non-cash gift vouchers are fine);
- the cost of the benefit does not exceed £50;
- the benefit isn’t provided for by the employee’s contract or any salary sacrifice arrangements; and
- the benefit is not provided in recognition of the employee doing something specific at work (eg working late or meeting a target).
What about directors?
Where the gift is to a director, all of the conditions above must be satisfied plus one more: the total costs of all benefits for the director in the tax year can’t exceed £300.
And the good news doesn’t spot there. Although the relief is likely to be used most in the run up to Christmas, it applies throughout the year and so it’s one to bear in mind for staff birthdays and other special occasions. Merry Christmas, HMRC.
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