A company can give gifts up to £50 in value to its employees, directors and company secretary, tax-free. In other words, you can receive a tax-free gift from your company and reduce your corporation tax bill. This is known as a trivial benefit.
Watch out for the restrictions
The tax-free gift must be bought using company money, not refunded to the director on expenses from company money, and it can’t be a reward for any work or achievement. So for example, the company can give a bunch of flowers or a Marks and Spencers gift card for Christmas, and this would be considered a tax-free gift. However, if you did the same because they had the best sales month ever, then this would be taxed as a benefit in kind.
What can I buy?
You could buy from stores you use regularly, items of clothing, children’s birthday presents – there are no limits on the different type of purchase you can make.
It can’t be cash or a voucher that is exchangeable for cash.
There are no limits on the number you can provide to an employee, but there is a limit of £300 worth of tax-free gifts a tax year for each director/secretary and their family.
Linked and regular transactions do not qualify
HMRC will look to link the benefits of a certain type. e.g. if you purchased a total of £300 of wine or Sainsbury’s vouchers in a series of transactions under £50 that is considered a linked purchase and will not qualify.
If there was a subscription for example to a monthly streaming service, this monthly expenditure would be considered to be a regular benefit.
A trivial benefit is considered to be a ‘one off’ benefit. e.g. a Christmas Tree at Christmas.
Further HMRC guidance can be found here
