GUIDE: Christmas gift tax reliefs to charities & staff
Christmas gift tax planning advice for businesses this festive season.
Christmas gift of up to £50 to employees
Remember that certain gifts to staff at Christmas are also tax-free if structured correctly. Employers are allowed to provide their directions and employees with certain “trivial” benefits in kind tax-free.
This exemption applies to small gifts to staff at Christmas, on their birthday, or other occasions and includes gifts of food, wine, or store vouchers.
There are of course a number of conditions that need to be satisfied to qualify for the exemption.
Conditions for the exemption to apply
- the cost of providing the benefit does not exceed £50
- the benefit is not cash or a cash voucher
- the employee is not entitled to the benefit as part of any contractual obligation such as a salary sacrifice scheme
- the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services)
Gifts to charity
Where possible taxpayers should “Gift Aid” any payments to charity to provide additional benefit to the charity. Higher rate taxpayers obtain additional tax relief on the grossed up amount donated.
For example, where an individual makes a £20 cash donation to charity the charity is able to reclaim a further £5 from HMRC making a gross gift of £25. Where the individual is a 40% higher rate taxpayer he or she is able to claim a further £5 tax relief under self-assessment, reducing the net cost of their donation to £15.
Note that the donor is required to make a declaration that they are a UK taxpayer and those that have not suffered sufficient UK tax to support the Gift Aid amount will taxed on the shortfall.
Remember that Gift Aid does not just apply to gifts of cash. Many charity shops will now sell donated items on your behalf and are able to treat the sale proceeds as Gift Aided donations. It is also possible to gift quoted securities and land and buildings to charity and claim Gift Aid on the market value of those assets.
More Christmas tax tips: Managing your Christmas party tax exemption in 2020
Count On Cardens
We would like to wish you all a merry and healthy Christmas and New Year. We look forward to a hopeful 2021 for our clients but also understand the tax complications that have resulted from COVID-19 deferrals and support schemes. Get in touch with Cardens at to discuss your circumstances.
Our Christmas opening hours:
- Close at 5pm on Wednesday 23rd December
- Reopen at 8.30am on Monday 4th January
