Last updated: 18 October 2026
Do you need to declare a cash gift from your employer?
A cash gift from your employer is taxable earnings, so it should go through payroll with income tax and National Insurance deducted, just like a bonus. Normally your employer handles this and you don’t need to do anything. If your employer paid you cash without deducting tax, you should tell HMRC, through Self Assessment or by contacting them. The tax-free trivial benefits exemption doesn’t apply to cash or vouchers that can be exchanged for cash.
Cash vs non-cash gifts
| Gift | Tax position |
| Cash, bank transfer or a cash bonus | Taxable earnings through PAYE |
| Cash voucher, or gift card over £50 | Taxable |
| Gift card of £50 or less, not exchangeable for cash | Can be a tax-free trivial benefit |
| Non-cash gift of £50 or less, not a reward for work | Tax-free trivial benefit |
| Christmas hamper or bottle of wine under £50 | Usually tax-free trivial benefit |
| Long service award (non-cash) after 20 years | Tax-free up to £50 per year of service |
| Staff party or annual event | Tax-free up to £150 a head a year |
Trivial benefits rules
A gift is a trivial benefit, and tax-free, if:
- it costs £50 or less, including VAT
- it isn’t cash or a cash voucher
- it isn’t a reward for work or performance
- it isn’t in your contract
Directors of close companies are limited to £300 of trivial benefits a year.
Example
At Christmas, Ellie’s employer gives every member of staff £100 in cash. It’s taxable, so it goes through payroll. As a basic-rate taxpayer, Ellie pays £20 income tax and £8 employee NIC, receiving £72. If her employer had given each person a £45 hamper instead, there would be no tax.
Gifts for personal events
A gift for a wedding, new baby or retirement that’s genuinely personal, and not because of work, may not be taxable if it’s from your manager personally or a staff collection. If the employer pays, it’s likely to be taxable unless it qualifies as a trivial benefit.
Employer’s side
For the employer, a cash gift is a deductible staff cost, but employer NIC at 15% is due on top. That’s another reason many employers choose small non-cash gifts instead.
PAYE Settlement Agreements
An employer can agree a PAYE Settlement Agreement (PSA) with HMRC to pay the tax on minor or irregular benefits for staff. Cash gifts are earnings and generally can’t go into a PSA.
What to do if tax wasn’t deducted
- Check your payslip and P60 to see if the gift was included.
2. Ask your employer to correct it through payroll.
3. If that’s not possible, tell HMRC so it can be collected through your tax code or a return.
Mandatory payrolling of benefits
Mandatory payrolling of benefits in kind is being phased in: company cars, car fuel, vans, van fuel and medical benefits from April 2027, and most other benefits from April 2028, according to HMRC’s August 2026 Employer Bulletin. Cash gifts already go through payroll.
Frequently asked questions
Is a gift from a client taxable?
It can be, if received because of your job.
Is a £50 voucher tax-free?
Only if it can’t be exchanged for cash.
Can I give staff cash tax-free?
No, cash is always taxable.
Does a gift affect benefits?
Taxable pay may affect means-tested benefits.
Related: employee reward scheme tax, company parties and mobiles for employees.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with employee rewards and gifts. See our small business accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 18 October 2026. It is not personal advice, so speak to an accountant about your own situation.
