Giving a 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, Gift Cards used for incentive and rewards or part of a contractual benefit to an employee are subject to Income Tax and NICs but 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 (inc VAT)*
Under the trivial benefit exemption: if each gift costs £50 or less, is non-cash, not performance-related and not contractual, then no tax/NIC and no P11D/reporting is required. (Gift Cards issued by Voucher Express are all non-cash - ie can be exchanged for a retailers goods or services but not exchanged for money)
If a gift exceeds the £50 limit, the whole value of the gift becomes taxable and subject to NIC — not just the amount above the threshold
More About Trivial Benefits
The terms Trivial Benefit refers to small staff gifts which can be given by businesses to staff members without paying Income Tax or NIC.
Examples of Trivial Benefits include instances when Gift Cards are issued for events such as birthdays, anniversaries or Christmas presents. Other examples when 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.
* Using Gift Cards In Ireland - A More Generous Approach to Trivial Benefits.
Whilst similar conditions to the UK apply in Ireland as to what constitutes a Trivial Benefit, the amount an employer can give as a present is set at a more generous €1,500 (From 1 January 2025). Now an employer can give up to five qualifying non-cash benefits in a tax year to an employee, and the cumulative value of those benefits must not exceed €1,500
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.