• 01 Mar 2016
  • jane.potter

Sometimes words are not enough to express your thanks or congratulations: flowers, wine or chocolates are needed. But where the recipient is your employee, there is a risk that the value of such a gift will be taxed on them as a benefit.

HMRC agree that such trivial benefits should not be taxed, but this is an unofficial rule applied by concession only. From 6 April 2016 the tax laws allow a trivial benefit to be provided free of tax and national insurance if it is worth no more than £50. The items must also not be cash or a voucher that can be converted into cash. More than one gift can be made per employee per tax year, but the gifts must not be a substitute for any part of salary or wages.

To prevent family companies from taking advantage of this tax-free benefit, the directors of those companies won’t be able to receive more than £300 of trivial benefits in one tax year. This cap will also apply to each member of the director’s family.

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