The HM Revenue & Customs trivial benefits allowance allows employers to gift employees up to £50 gift voucher/gift card tax free. This makes gift vouchers an attractive way to say thank you rather than cash paid via an employee’s salary.

For gift cards to qualify as tax exempt, the gift voucher must not be more than £50 and must only be exchanged for goods or services. It also must not be performance based and there must not be a contractual obligation for the benefit. 

If the voucher can be exchanged for cash, then the benefit is taxable and must be reported on the payroll, and tax and class 1 national insurance should be deducted. Also, if a gift voucher is over £50 then the whole of the gift is taxable.

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Shelly O'Neill
Shelly O’Neill, Tax Advisor