Your 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 gift can not be:-
- a voucher that is exchangeable for cash
- purchased using personal money or cash and then refunded on expenses from the company or added to a company loan account
- the reward for any work or achievement
So for example, you can get yourself a bottle of champagne for celebrating your birthday, and this would be considered a tax-free gift. However, if you did the same because you had the best months income ever, then this would be taxed as a benefit in kind.
What gifts can I buy?
You could buy an item of clothing, toys, gift vouchers, food and drink, a meal out, cinema tickets, a tank of petrol etc. – there are no limits on the different type of purchase you can make.
How many gifts can I give?
There is no limit on the number of gifts you can give but, there is a £300 limit for the total value of tax-free gifts a tax year a company director or secretary and their family can receive. There are no limits on the total value you can provide to an employee in a tax year.
Linked and regular transactions do not qualify
- A trivial benefit must be a ‘one off’ benefit. e.g. a Christmas Tree at Christmas.
- If you have a subscription for monthly club membership, it’s an expected monthly expenditure and considered to be a regular, not trivial ‘one off’ tax-free gifts.
- If you purchase a total of £300 of vouchers for the same supplier, in a series of transactions of under £50, they are regular ‘linked’ purchases and would not qualify as tax-free gifts.
For these reasons, you should not make a gift to yourself every month and make sure it is different to any of the other gifts you have previously bought in the tax year.