Wedding gift to an employee - benefit in kind????

Fitz

One of the companies I run a payroll for gave an employee a wedding gift. This was a £500 voucher for John Lewis.

I have looked through the HMRC site and EIMO1460 states that the gift does not count as earnings within section 62 if it is made on personal grounds (for example, a wedding present).

However, when I phoned the HMRC for clarification I was told that as it was a cash voucher it should be added to the employees earnings - which seems unfair as it was supposed to be a one off wedding gift!

Can anyone advise how I should treat this gift??

Monsoon

Asking HMRC for advice isn't really that useful - as you can see, they are wrong.

The EIM you refer to agrees with the guidance from CCH Online (which you can get as a MIP - it's great):


"A gift received from an employer or third party by an employee is not automatically tax-free. It is taxable if it is received as a reward for services past, present or future (or simply, if it is provided by reason of the individual’s employment by way of voucher or, in the case of an employee earning at a rate of £8,500 a year or more or a director, otherwise). Some factors of relevance in deciding whether a voluntary payment, benefit or perquisite may escape tax are as follows.

•Whether, from the recipient’s standpoint, it accrues to him as a reward for services.

•If his contract of employment entitles him to receive the payment there is a strong ground for holding that it accrues by virtue of the employment and is therefore remuneration.

•The fact that a voluntary payment is of a periodic or recurrent character affords a further, though less cogent, ground for the same conclusion.

•If it is made in circumstances which show it is given by way of a present or testimonial on grounds personal to the recipient (e.g. a collection made for a vicar of a given parish because he is so poor, or a benefit for a professional cricketer in recognition of his long and successful career), then the proper conclusion is likely to be that it is not a reward for services and is therefore not taxable.

Awards made under most staff suggestion schemes are tax-free (ITEPA 2003, s. 321 and 322, formerly ESC A57)."

I suggest it's not taxable