On the tenth day of TAXmas, we advise to thee on employee gifts for long service...
Spread the new year cheer, with a long service award to celebrate an employee’s hard work over the years.
It can be difficult to know if an award to celebrate an employee’s length of service is a taxable benefit. However, employers may be able to acknowledge these milestones with a tax-free gift.
20 years of service
Firstly, to qualify for a long service award, the employee must have worked for the employer for at least 20 years. As well as this, the employee must not have received a gift for their service within ten years before this. To give an example, an employer rewards an employee after fifteen years of service. They then give the same employee an award after twenty years of service. The first award given would be taxable as it does not fit the conditions for the exemption. Additionally, the second award would also be taxable as the employee had already received an award of the same kind in the past ten years.
Giving gifts
To be exempt from tax, this award must be something other than money or anything that is exchangeable for cash. It’s important for employers to note, there is a £50 per year of service limit on what can be spent on these gifts. For instance, an employee who is eligible for a long service award for twenty years, can have a gift worth up to £1,000. This award could be something such as a watch or a handbag. Any cash awards given are not included in the exemption.
If you need any help with employment tax matters, either for the Christmas past, present or the future, please get in touch with us at employmenttaxesteam@unw.co.uk.
