When a company pays for something for a director of a personal nature then this is usually allocated to the director’s loan account as a private expense to avoid the director being taxed on a benefit in kind at their marginal rate of tax. However, there are some expenses that a company could pay which would be exempt from this tax charge and could then be treated as a business expense (to offset against the company’s corporation tax) and not generate a personal tax liability. These expenses are termed ‘trivial gifts’, and applies to directors and all other employees
There are, of course, some rules…The gift must not
- exceed £50
- be cash or a voucher that could be turned into cash. So, a turkey, or a bottle of champagne, or an M&S food voucher, for example, would all qualify
- be given in recognition of any services given – indeed it should be completely unrelated to the job a director or an employee carries out, or how the company is itself performing. So, a turkey for Christmas may be given because the directors love Christmas so much they just want to share the joy
- become an expectation – so if the company pays for a random few drinks down the pub one Friday after work for a bunch of employees, this is ok, but if the workers expect to be taken out every Friday then this becomes part of their remuneration for services provided and will be taxable and subject to NIC.
The gifts can be given as often as the directors of the company decide, as long as the conditions above are fulfilled, although there is a limit of £300 per annum for each director. There are no restrictions on who should be included as these gifts are, by their very nature, random with no reference to the employee status.
So why not let the company treat you at Christmas…or in fact at any time of the year, just because the sun is shining?
Tax on trivial benefits – HMRC
Office Christmas parties – Blog
Employment Benefits – Factsheet
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