HMRC internal manual

Employment Income Manual

EIM01040 - Employment income: Christmas presents or bonuses

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Section 62 ITEPA 2003

Christmas presents paid in cash to employees by employers are almost invariably taxable as earnings within Section 62 ITEPA 2003 (see EIM00515).

In Laidler v Perry (42TC351) the employer gave all his employees a £10 voucher at Christmas to be spent in the shop of their choice. It was accepted that, because of the wide choice in spending vouchers, they were worth their face value. They were held to be emoluments from the employment, and they are therefore within the definition of earnings at EIM00520.

Christmas presents in cash from persons other than the employer are taxable earnings if:

  • it is a widespread custom for such presents to be given and
  • the expectation that presents will be received attaches to the employment.

This was the case in Wright v Boyce (38TC160) where it was customary for a huntsman, whoever he was, to receive cash presents from members of the hunt at Christmas.

All directors and employees (other than lower paid employees for 2015/16 and earlier only) are taxable on any cash gifts that they may receive from their employer. This is because of the deeming provisionin Section 201(3) ITEPA 2003 (see EIM20502).

Do not contend that any liability arises on small gifts in kind given by employers to employees who earn at a rate of less than £8,500 per year for 2015/16 and earlier only. As regards gifts of goods by persons other than the employer see EIM21715.