How buying staff gifts could break your payroll

  • Pay & Benefits
Peninsula Logo

Peninsula Group, HR and Health & Safety Experts

(Last updated )

Read our article: 'How buying staff gifts could break your payroll'. Contact us today for more information about our Employment Law, Health & Safety, and HR services.

As another year of work draws to a close, what better way to reward your staff this holiday season than with a small gift? And nothing could be simpler than buying presents, right? Well, not quite. Depending on the value of each gift you give out, you may need to report it on your annual P11D form. And that affects the tax your people pay and the employer’s National Insurance you pay. So you see, gifts are a bigger deal than it seems. To find out the most cost-effective staff gifts for your business, read on…

  1. Vouchers

If you give staff store vouchers worth £50 or less—such as for Amazon, Marks & Spencer or Debenhams—you don’t have to report it, and there’s no cost to your business (other than the cost of the voucher). This option is cheaper than putting a £50 (or less) bonus through the payroll because you don’t have to pay National Insurance.

  1. Gifts

Maybe you’re a bit more imaginative. Vouchers won’t cut it, so you’d like to give your staff something more thoughtful. Maybe some chocolates, wine, or even a turkey each for Christmas dinner (some businesses actually do that). But what you need to know most is that, again, if the gift you choose is worth £50 or under, you have no extra costs to pay nor any reporting to do.

  1. Meals

Thinking of treating your staff to a Christmas meal? Good choice. Why? Because as long as you pay less than £50 a head, you have no extra costs or reporting to do… as long as you get it right. Make sure you list the party as a ‘festive celebration’ rather than as a ‘reward’ so that staff don’t pay tax and you don’t pay National Insurance. And according to HMRC’s reporting rules, you can give meals as a gift on top of any Christmas party you might hold.

  1. Gifts worth over £50

Give staff gifts worth over £50 and you must report it at the end of the tax year on your P11D form. In this case, your employees will pay tax and you’ll pay employer’s National Insurance. Find out how to report staff gifts worth over £50 on your P11D form. Please call the Peninsula payroll advice team today on 0844 892 2772 (option 3). Bio: Richmal Price is a payroll specialist at Peninsula. 

FAQs

Got a question? Check whether we’ve already answered it for you…

Related articles

  • Retailer looking at tablet

    Blog

    Clawback provisions are not the same as a restraint of trade

    The High Court, in the case of Steel v Spencer Road LLP (t/a The Omerta Group), had to consider whether or not a clawback clause was a restraint of trade

    Peninsula TeamPeninsula Team
    • Employment Contract
  • Adjustment for menopause

    Blog

    Employer failed to make reasonable adjustments for employee experiencing the menopause

    The Equality and Human Rights Commission (EHRC) publishes guidance for employers on their legal obligations towards employees experiencing menopause symptoms

    Peninsula TeamPeninsula Team
    • Employment Contract
  • Increase to minimum wage

    Blog

    Minimum wage, SSP and family-friendly rates to increase in April 2024

    As the National Minimum Wage marks 25 years since it was first introduced, this year it is no ordinary year when it comes to pay rate changes

    Peninsula Team Peninsula Team
    • Pay & Benefits
Back to resource hub

Try Brainbox for free today

When AI meets 40 years of Peninsula expertise... you get instant, expert answers to your HR and Health & Safety questions

Sign up to our newsletter

Get the latest news & tips that matter most to your business in our monthly newsletter.