Q. I am keen to give my employees some vouchers from a high street retailer as an added Christmas bonus this year. Are there any tax implications?

A. Planning ahead is key as the answer could be yes or no depending on the amount and type of voucher.

No – If the voucher is worth £50 or less and meets certain other criteria, then it can be given tax-free to the employee.

Yes – If you give incentives – either as cash or as redeemable vouchers – then you may be liable for PAYE tax and National Insurance Contributions (NIC) on these incentives.

However, if the voucher value exceeds £50 per employee then it will be taxed based on the following:

• Whether it is exchangeable for cash – then it should be added to payroll and subject to tax and NIC along with the employee’s normal taxable income.

• If the voucher is exchangeable for goods and services only. In this case you, as the employer, will need to complete a P11d form for your employee, from which they will be taxed. The value of the voucher should also be included in the employee’s earnings, through the payroll, so it is subject to NIC.

Some non-cash vouchers are wholly exempt from NIC, including vouchers for travel to and from work on a work bus, vouchers for social functions worth up to £150 a head, and childcare vouchers up to a set amount.

There are other types of vouchers that are exempt – you can check the full list here: Employer Further Guide to PAYE and NICs.

Sometimes a third party business will gift one of your employees a non-cash voucher without you being involved. In this case you wouldn’t have to pay any NIC. Instead, it would be the third party’s responsibility to pay what is due, as long as you have had no involvement in arranging this gift.