Press release: Tax body highlights the Santa clause that allows employers to give hassle free gifts this Christmas
The Association of Taxation Technicians (ATT) is highlighting to employers that this is the first Christmas that they can provide a small gift to their employees that is automatically free of tax.
They can do this by taking advantage of the new statutory exemption for trivial benefits that was introduced in April this year. This new exemption means that employers have, since 6 April 2016, been able to make gifts of up to £50 each to their employees completely free of tax and also without having to contact HMRC at all to tell them about the gift.
Prior to 6 April 2016, if an employer wanted to make a small gift to an employee, they had to contact HMRC on each and every occasion to obtain HMRC’s agreement that the gift could be considered as ‘trivial’ and could therefore be paid tax-free.
Yvette Nunn, Co-chair of ATT’s Technical Steering Group, said:
“This is a huge improvement and simplification to the procedure that existed previously. By putting the trivial benefit exemption on a statutory basis and providing a list of qualifying conditions1 under which a benefit is considered trivial, HMRC has provided clarity and certainty for employers. This should make it much easier for and possibly encourage employers to make goodwill gestures to their staff this Christmas and that can only have a positive impact on staff morale.”
From HMRC website: One of the conditions that has to be satisfied before the trivial benefits exemption can apply is that the benefit is not cash or a cash voucher. However, benefits provided in the form of a non-cash gift voucher can be covered by the exemption.
Notes: for editors
Section 323A ITEPA 2003 sets out a statutory exemption for trivial benefits. The benefit is exempt from tax if all the following conditions are satisfied:
- the cost of providing the benefit does not exceed £50.
- the benefit is not cash or a cash voucher.
- the employee is not entitled to the benefit as part of any contractual obligation (including under salary sacrifice arrangements).
- the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services).
Employers will be expected to keep their own records of trivial benefits made to employees’