What Are The NIC & Income Tax Rules Around Giving VEX Gift Cards?
This article relates to VEX Gift Cards brought by businesses for use as staff rewards, incentives or gifts.
Giving a VEX Gift Card to an employee is a great way to offer an incentive, reward or gift but depending on how they are used these gifts may attract income tax and National Insurance Contributions (NICs). As a rule of thumb VEX Gift Cards may used for incentive and rewards are subject to Income Tax and NICs whilst when used as gifts and presents they can be classified as Trivial Benefits (see below) so long as the sum given doesn't exceed £50.00
VEX Gift Cards when used as Incentives or Rewards are taxed in full in the same way as regular pay. Income tax and employee NICs are due on the face value of the voucher, regardless of the cost to the employer, and must be accounted for through the PAYE system along with employer NICs.
The terms Trivial Benefit refers to small staff gifts which can be given by businesses to staff members without paying tax income tax of NIC. This terminology applies to VEX Gift Cards when the value issued to each individual costs less than £50 per employee; and it is given as a gift rather than a reward or incentive. If VEX Gift Cards are issued for events such as birthdays, anniversaries or Christmas presents then they can be classed as Trivial Benefits rather than Benefits-in-Kind. Other examples when VEX Gift Cards can be classified as Trivial Benefits include New baby gifts and Welcome gifts for new employees.
No limits apply to how many of these gift cards classified as trivial benefits can be issued by your business but each gift card must not cost more than £50 per employee.
Your local Tax Office
If you are in doubt about how your usage of VEX Gift Cards should be treated in your tax submissions you should always consult your local tax office.
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