Ok, so it might still feel a little bit early to be saying the “C Word,” but Christmas really is only round the corner. And for those micro business owners amongst you who have a small team of employees, you’ll probably be turning your thoughts to Christmas parties and gifts in no time.
Amongst the questions we find in our inbox from time to time, we’ve had 3 this year ask about whether or not you can buy gifts for employees and at no time is that more relevant a consideration than in the run up to Santa Season. So here it is…
Can I Buy Christmas Gifts for Employees?
Yes you can. That’s the short answer.
But there are some considerations around how much you spend that you’ll need to think about unless you also want to land them with a tax bill.
Christmas Gifts Are a Benefit
technically speaking, buying your staff any gift at any time of year (even if Santa delivers is) is a benefit. However, if your Christmas gifts meet the criteria to qualify as Trivial Benefits then these do not need to be declared on a P11D form and therefore your staff will not need to pay tax and National Insurance on their value.
Bear in mind that you can spend up to a maximum of £300 on trivial benefits for each member of staff each year and each individual gift must be no greater in value than £50. In other words, you can buy up to 6 gifts of up £50 each per year. If you’ve already bought 6 in this tax year, then a further gift at Christmas would need to be declared on a P11D.
Can I buy staff alcohol at Christmas?
Yes. You can buy alcohol gifts for staff as well. If you don’t want them to pay tax and National Insurance on it, just ensure the value is £50 maximum and you’ve met all other Trivial Benefits criteria.
Does the £50 Include VAT
Yes. For the purposes of gifting in line with trivial benefits, you must include the VAT. If your gift exceeds £50, inclusive of the VAT element even by a penny, then the whole amount becomes taxable.
If you’re unsure about P11D requirements for your staff, speak to your accountant or other qualified professional.