Employment income: gifts not taxable as earnings
Section 62 ITEPA 2003
A gift does not count as earnings within Section 62 if it is made:
- on personal grounds (for example, a wedding present) or
- 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.
|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 do not 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).