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HMRC internal manual

Employment Income Manual

Particular benefits: small gifts in kind from third parties

Section 324 ITEPA 2003

The guidance at EIM01450 onwards applies generally to gifts and other voluntary payments from third parties to directors and employees, except for 2015/16 and earlier those in an excluded employment (see EIM20007).

Small gifts of goods made to employees (or a member of their family or household) are exempt from tax if the following conditions are met:

  • the gift is not provided by the employer, or a person connected with the employer
  • neither the employer, nor a person connected with the employer, directly or indirectly procured the gift
  • the gift is not made in recognition, or in anticipation, of particular services performed by the employee
  • the gift is not in cash or in vouchers or securities that can be converted into cash
  • the total cost to the donor of all eligible gifts to the employee in a tax year does not exceed £250 (before 6 April 2003 the figure was £150). The cost to the person making the gift includes any VAT paid, whether or not it is reclaimable.

Where the cost of a gift (or gifts) an employee receives from the same third party in a tax year exceeds £250, tax will be payable on the full amount of the gifts.