Gifts for employees?

[HungryHorse]

I was just reading through the FreeAgent 'community' to see what is being discussed right now in terms of changes and improvements, then came across this question:

http://community.freeagent.com/freeagent/topics/gifts_for_employees-1evu3t

Can companies really buy their employees gifts and treat it as an expense? If that was the case, what's to stop a one man company buying it's employee a gift? Sounds ridiculous. Even if it wasn't a one man company, an employee could be a friend or family... so where does buying gifts stop?

Thinking about it now, I doubt it's true... just thought it was odd so decided to ask the experts here for further clarification. I have no desire for my companies to be buying employees (myself or anyone else) gifts!

Cheers

 

[Mitchells Bristol]

Most gifts will be classed as a benefit-in-kind for the employee concerned, and therefore taxable on the employee.

 

[HungryHorse]

Most gifts will be classed as a benefit-in-kind for the employee concerned, and therefore taxable on the employee.

How does this work? Sounds like it would be a cheap way for your company to buy you a load of "gifts". It also sounds like a gift I wouldn't want to receive as an employee of a company.

The whole thing sounds ridiculous - companies buying birthday gifts for employees? If the bosses / managers / other employees want to they should just buy their employee / coworker a gift personally!

 

[Mitchells Bristol]

How does this work? Sounds like it would be a cheap way for your company to buy you a load of "gifts".!

The value of many gifts will be included as gross income through the employee's payroll and will have tax and NIC deducted accordingly.

It also sounds like a gift I wouldn't want to receive as an employee of a company.!

If an employer regularly provides gifts to its employees, in my experience such employers will apply for a PAYE Settlement Agreement to meet the tax liability arising on the employee's behalf. On the basis that a gift is not so great a gift if you learn you will lose 42% of the value in tax and NIC.

The whole thing sounds ridiculous - companies buying birthday gifts for employees? If the bosses / managers / other employees want to they should just buy their employee / coworker a gift personally!

In my view this is sensible, and will prevent tax avoidance. If the employer gave cash it would be taxable, so if instead the employer gifts the employee an item of equivalent value then this too should be taxed, otherwise you would find employees remunerated in iPods, TVs etc tax free.

Trivial benefits are excluded from the rules, although their is no strict definition of "trivial". Small gifts of flowers for the birth of a child or marriage would not be taxable for example.

Hope this helps.