Disclaimer: We are providing this information for guidance purposes only and that the reader should not treat this as tax advice. They should consult their own tax advisers for formal tax advice.
Definition
In the UK, whether employee gifts are taxable depends on HMRC rules around trivial benefits and benefits in kind. Knowing the thresholds helps you give thoughtful gifts without creating tax liabilities. Read our full guide here.
What is it?
Tax treatment of employee gifts defines when a gift triggers income tax/NIC or is exempt as a trivial benefit under HMRC rules.
Why does it matter?
Getting this right avoids unexpected tax or reporting obligations for employers
and employees. Certain gifts can be tax-free under clear conditions.GOV.UK
How does it work?
Trivial benefits: Gifts costing £50 or less, not cash/cash vouchers, not performance-related, and not contractual are exempt from tax/NIC and don’t need reporting.
Directors of close companies have a £300 yearly cap on trivial benefits.
Gifts that don’t meet these criteria may be taxable and require reporting on forms like the P11D.
Common pitfalls / misconceptions
If a benefit is part of salary sacrifice, it cannot be trivial.
Going even slightly over £50 means the entire amount becomes taxable.
Quick FAQ
What counts as cash vs non-cash?
Cash or cash-equivalent cards (prepaid debit) are usually taxable - non-cash store vouchers often qualify.
Can I give multiple trivial benefits?
Yes for most employees, as long as each meets the criteria. Directors of small companies have a £300 total cap.
Do I need to report trivial benefits?
No - exempt gifts don’t require P11D reporting or NIC.