Yes, but you need to meet the following conditions to avoid tax issues:
- Ensure it is less than £50.
- Ensure it is not cash or cash equivalent (such as a voucher).
- Ensure it is not linked to the employee’s performance.
- Ensure it is not specific or attached to the employee’s contract.
Providing you meet the above conditions your gift will be considered a Trivial Benefit, giving you the following tax benefits:
- You can pass the gift to your employee without triggering income tax, national insurance (or PAYE & BIK obligations)
- You can reclaim any VAT incurred in purchasing the employee’s gift
- You can obtain Corporation Tax Relief in computing your company’s taxable profits
Warning – the total number of trivial benefits in a given year are capped at £300 for directors of close companies. Excessive use of trivial gifts can also be challenged by HMRC so should not form part of a regular pattern.
If the gift does not meet any one of the above criteria, it is likely that you will lose all the tax benefits.
