There is an exemption from tax and National Insurance for benefits with a value up to £50 each provided to employees and directors. There is no limit to the number of benefits which can be given to an employee, but there is a limit of £300 per year for directors or office holders in family companies. If more than one member of a family is a director or employee, they each have a £300 exemption.
The benefit cannot be cash or a cash voucher, and it can’t be provided as part of a contract or in recognition of services performed as part of employment duties, as that is taxable as salary.
Here are some examples, taken from HMRC’s website, of the types of gifts which are allowed. The expense is tax deductible for the company, and tax exempt for the recipient:
£30 gift tokens to each of husband and wife director, and their son. The cost of the son’s voucher is allocated between the two directors, so each has used £45 of their annual £300 allowance.
Birthday meals for directors or employees where the cost is under £50 per head.
Christmas turkeys or bottles of wine, for directors or employees.
So, don’t forget to celebrate those special occasions throughout the year. You need to find 6 of them – why not start with a bottle of fizz to celebrate HMRC’s generosity?