Time for a treat?

Gift cards tax break for directors

Want to be nominated for loveliest employer of the year? With the Trivial Benefits in Kind Exemption (we know…hardly a smooth trip off the tongue phrase) that emerged from the Finance Bill 2016, you can now treat your employees without them facing any tax hassles. So what kind of treats apply?

  • Gift vouchers (up to the value per head – see “small print” below)
  • Taking a group of employees out for a celebratory birthday meal
  • Flowers on the birth of a new baby
  • A summer garden party for employees

And it gets better……you can also treat yourself!

If you are the director of a Limited Company, then you, too can receive up to £300 per tax year -which will not be subject to tax or NI – in the form of gift vouchers from your favourite retail or on-line store. A director of multiple companies can take advantage of this opportunity for each company! But be quick, as great tax breaks like this often disappear just as quickly as they appear!

You can get £300 of gift cards (in £50 tranches) on or before the 5th April – and then another £300 (in £50 tranches) on or after the 6th April 2019 – giving you £600. 

There are obviously a number of conditions that a trivial benefit for an employee has to satisfy in order for it to qualify for the new exemption & these are outlined below in some detail. However, the basic lowdown is that it has to be a freely given gift related to employee welfare & goodwill, not employment service or performance.

The small print…

  • No more than £50 per benefit (or average of £50 if the benefit is provided to a group of employees, & it is not possible to work out the exact cost for each individual). The £50 limit (fortunately) does not apply to company directors.
  • If the employee exceeds this amount then the whole lot becomes a benefit in kind & therefore the normal tax rules apply.
  • Cash or a cash voucher are not eligible but gift vouchers eg for a shop, are acceptable
  • There must be no entitlement to the benefit as part of the employee’s contract (including salary sacrifice schemes).
  • The benefit is not provided in recognition of a work related service or employment duty.

For additional information, tailored to your company, please contact a member of the Alexander Knight & Co team.