Are Christmas gifts from customers allowed?

Gifts may be received by your employees from third parties such as customers or suppliers, due to contact they may have had with throughout the year.

Small gifts of goods made by third parties to employees (or a member of their family or household) are exempt from tax if the following conditions are met:

• The gift is not provided by the employer, or a person connected with the employer
• Neither the employer, nor a person connected with the employer, directly or indirectly bought the gift
• The gift is not made in recognition, or in anticipation, of particular services performed by the employee
• The gift is not in cash or in vouchers or securities that can be converted into cash
• The total cost to the donor of all eligible gifts to the employee in a tax year does not exceed £250.
• The cost to the person making the gift includes any VAT paid, whether or not it is reclaimable.

Where the cost of a gift (or gifts) to an employee received from the same third party in a tax year exceeds £250, tax will be payable on the full amount of the gifts.

If you know your staff will receive gifts, it’s worth finding out what implications there will be in advance, so please contact us on 0131 202 9888 or use our simple online contact form to arrange a free initial consultation.

Date published 30 Oct 2019 | Last updated 26 Nov 2020

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.