HMRC internal manual

Employment Income Manual

EIM01460 - Employment income: gifts not taxable as earnings

Section 62 ITEPA 2003

EIM01450 gave examples of the type of gift, or voluntary payment, which count as earnings within Section 62 ITEPA 2003 (see generally EIM00520 onwards).

A gift does not count as earnings within section 62 if it’s made:

  • on personal grounds (for example, a wedding present)
  • as a mark of personal esteem or appreciation

It is not possible to list factors that will determine with certainty whether or not a gift is taxable as earnings. In those cases where the courts held that a gift to an employee was not taxable, the facts tended to be special. The main cases where gifts were held not to be taxable are shown in the following table.

Tax case Situation
Turner v Cuxson (2TC422) A grant from a religious society in recognition of faithful service by a clergyman
Cowan v Seymour (7TC372) Gift by shareholders to a person who wound up the company
Reed v Seymour (11TC625) Proceeds of a cricketer’s benefit match
Bridges v Beardsley (37TC289) Gift of shares to the director of a company
CIR v Morris (44TC685) A gift to mark appreciation of work done by an employee during a period of secondment
Moore v Griffiths (48TC338) A bonus to members of England’s football team which won the World Cup in 1966

As regards Christmas presents paid in cash to employees by employers, see EIM01040.

Gifts that are not cash and don’t have a money’s worth value (EIM00530), are not earnings taxable under section 62. But they may be taxable under the benefits code (EIM20006), as may cash gifts and gifts that have money’s worth value, not taxable as earnings (EIM21006).

Gifts that are made after the employment has ceased may be taxable as specific employment income within section 401 ITEPA 2003, if they are not taxable as earnings (see EIM13010 onwards).