As the year comes to a close, we would like to express our gratitude for your continued trust and support in our services. 

With the festive season just around the corner, it’s time to remind you of the tax rules regarding ‘trivial benefits in kind’ or 'gifts' that you may wish to provide your clients, employees, or directors with. Please find below your guide to giving gifts this holiday season.

If you have any questions or for more information, please contact your Account Manager, or call us on 0121 693 5000 (Solihull Office) or 01384 250202 (Halesowen).

Just to let you know, our offices will be closing at 5pm on Friday 22 December 2023 and will re-open for normal working hours from Tuesday 2 January 2024.

We wish you and your loved ones a happy holiday season and a prosperous new year. May the coming year bring you joy, peace, and success.

All the best,
The Directors and Account Managers at Jerroms

What Are 'Trivial Benefits In Kind'?

As a reminder, 'trivial benefits' are small gifts or entertainment that you can give to your staff without having to report them to HMRC or pay any tax or National Insurance on them. If a gift meets the full criteria below, you don't need to let HMRC know - and you won't need to pay National Insurance Contribution (NIC) or tax.

Gifts For Employees

You don’t have to pay tax on a gift for your employee if all the following applies:

• The benefit's value must be less than £50
• You can't give cash, or vouchers which can be exchanged for cash
• It can't be as a result of work or performance (such as a bonus)
• It can’t be in the terms of their contract

If your gift does not meet all of the above points, then it must be taxed in the normal way and it is subject to any other exemptions or allowances. Where a gift exceeds the £50 limit, the whole value of the gift becomes taxable and not just the excess.

Examples of trivial benefits:

• A gift for the birth of a baby
• Flowers for an unwell colleague
• A Christmas present
• A birthday present
• Team activity

Directors of ‘close’ companies

For Directors of ‘close’ companies (a limited company that’s run by 5 or fewer shareholders), there is an upper limit of £300 per Director in a tax year - although each individual gift is still subject to a £50 limit. The limit of £300 per Director is annual and cannot be rolled forward.

Gifts For Clients

HMRC does not allow any tax deductions for ‘client entertaining’. Gifts for potential customers are also disallowed.

The only exception is if the gift is small, costs less than £50, and displays the brand name, such as food and drink items with the company logo and/or branding clearly visible on the product itself, not just the packaging. Some common examples are pens, diaries, and notepads, etc.

Gifts given to charities for Christmas are tax-deductible.

Claiming Christmas Party Expenses

Limited companies (but not sole traders) are permitted to claim party expenses against tax.

• The event must be open to all members of staff
• It must be an annual event e.g., Christmas or summer parties
• It must be no more than £150 per head for the tax year

Going over the limit, will make it taxable.

Virtual parties

For virtual parties, e.g., any employees that work remotely or cannot attend in person, these are also claimable, if they comply with the same rules as stated above.