Christmas Gifts
Thursday, November 17, 2011 at 12:00PM 
Christmas giftsI’m looking at what to order for my employees for their Christmas presents. Is there any advice you have for me? I Want to make sure the business gets tax relief and can recover any VAT it incurs, but more importantly, I don’t want my employees to pay tax or National Insurance on their gifts.
Kai, Melksham
If you buy your employees a seasonal gift such as a joint of meat, a bottle of wine or a box of chocolates, then this would be deemed ‘trivial’ and therefore, there are no reporting requirements and nor would any tax or National Insurance be triggered.
However, if your gifts are more lavish than the examples above- say a hamper or a case of wine- then the cash equivalent must be taxed via the payroll, form P11D or a Pay As You Earn Settlement Agreement (PSA). With the first two options, tax and National Insurance will be triggered and will be deducted from the employee. However, with a PSA the employer agrees to settle their liability.
Gifts and entertaining is a fairly complex area, as it can have tax, National Insurance and VAT implications. Please feel free to contact your local TaxAssist Accountant if you would like to discuss this further.
We provide tax accountancy services in Melksham and throughout the UK. http://www.taxassist.co.uk
PAYE 
Reader Comments (1)
Phew!
I work for a site that searches for chartered accountants and I was actually unaware of these details. Kinda shameful, really.
I think I will probably go ahead with my plan for slightly more generous Christmas gifts, but...wow, I deal with tax almost every day and it's still shocking to me how easily it can drain the fun out of anything. ;)