Rewarding staff in a way that feels thoughtful, meaningful and simple to manage is a challenge that many employers face. That’s why gift cards have become such a popular choice, they strike the perfect balance between flexibility for colleagues and are easy for you to administer. When you pair those benefits with a retailer that offers everyday essentials and nationwide convenience, gift cards become even more practical as a staff reward, but some employers aren’t sure of the tax complications.
In this guide, we break down the tax rules, exemptions and key considerations around giving gift cards to your teams, helping you stay compliant while still showing genuine appreciation. If you’re exploring smart, tax-efficient ways to recognise your team, gift cards from Asda for Business fit seamlessly within HMRC’s trivial benefit rules.
Why employers give gift cards to employees
Gift cards and vouchers are a simple, flexible way to recognise colleagues. They let you say thank you without the guesswork of traditional gifts, and when used well, they can lift morale, boost retention, celebrate milestones and strengthen team culture, all while being easy to manage and budget for.
So, can a company give gift cards to colleagues? Absolutely, provided you plan this with the tax and practical implications in mind. From the employer’s side, gift vouchers are classed as non-cash benefits to employees (i.e., they’re benefits in kind rather than salary). They’re not treated the same as paying more salary: the value delivered to the employee may trigger tax/NI or benefit-in-kind reporting if certain criteria aren’t met.
The phrase “non-cash” is key. If a voucher is effectively convertible into cash (or treated like salary), the tax treatment changes. And while the flexibility is a benefit, the rules mean that you need to check how, when and to whom you issue the voucher, as well as how you record it across the year.
Are gift cards for employees tax-deductible?
In short: yes, in many cases the cost can be treated as a business expense (i.e., deductible against profits) if it relates to staff, but with caveats. The overarching rule for the employer is that gifts to employees are allowable as a business expense if they are wholly and exclusively for the purpose of the business (i.e., staff reward, recognition, morale).
In practice, if you provide a gift card to a member of staff as a simple thank you – rather than part of their pay – you can likely deduct the cost for corporation tax or income tax (depending on your business structure), as long as the gift is a legitimate staff benefit. But, if the gift is linked to performance, such as a reward for hitting a sales target, the risk is that it becomes taxable as part of remuneration and you may lose the simple staff benefit status.
You should check that issuing the voucher doesn’t require the employee to give up salary.
So overall, yes, gift cards can be deductible. Just keep the purpose clear and ensure the gift card is treated as a genuine non-cash staff reward rather than a bonus in disguise.
Do gift cards given to employees need to be taxed?
This depends on whether the voucher qualifies as a tax-free benefit (thanks mainly to the “trivial benefit” rules) or whether it is a benefit in kind, taxable via PAYE or P11D.
If you give colleagues gift cards at Christmas or birthdays as a token gesture (under the trivial benefit rules, see next section), then no additional tax/NI or reporting may be required, and you are not required to include the cost in the employee’s earnings. If you give the voucher as a reward strictly for performance (e.g., hitting a sales figure) or as a contractual benefit, then it is likely taxable; you will need to report it, deduct tax & NICs and treat it as part of pay. If the voucher is equivalent to cash (e.g., pre-loaded card, cash-equivalent voucher), then HMRC may treat it as earnings.
For example: if you give colleagues a £40 Christmas gift card with no conditions, under the trivial benefit rules (cost under £50, not contractual, not cash), you won’t need to tax or report it. But if you give a £100 voucher for hitting a performance target, the full amount is taxable, you need to add it as pay, deduct tax/NI and report via P11D if not taxed via payroll.
What the HMRC “trivial benefit” rules mean for gift vouchers
The “trivial benefit” rules are particularly helpful in the context of staff gifts (including gift vouchers), but you must make sure the benefit meets all the criteria set out by HMRC. This means that when you are giving gift cards to your staff, you need to check carefully:
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1
That the voucher isn’t cash or a cash voucher
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2
That the cost is £50 or less (including VAT)
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3
That the gift is not contractual or expected as part of employment
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4
That the gift is not in recognition of performance
When gift cards fall outside the trivial benefit exemption
If any of these above criteria aren’t met, then you can’t rely on the trivial benefit exemption. In this case, the full value of the gift (not just the excess over £50) becomes taxable.
Can employers give gift cards to employees at Christmas?
Yes – lots of employers choose to give employees gift cards for Christmas as a gesture of thanks. The question is whether the gift qualifies for the trivial benefit exemption. If you give each colleague a voucher worth £45 for Christmas, with no performance link and it’s not a contractual benefit, you’re likely within the trivial benefit rules, and you won’t need to worry about tax.
Are employee gift cards taxable benefits-in-kind?
If the gift card doesn’t qualify for the trivial benefit exemption (i.e. it doesn’t meet all 4 points in the trivial benefits section above), then yes, it becomes a benefit-in-kind. That means the employee must pay income tax on it and the employer must report it via payroll or on form P11D (and may owe Class 1A NICs).
For employers, this comes with a few considerations. If the voucher is performance-linked, make sure you include it as earnings and deduct tax/NI accordingly. You’ll also need to decide whether you operate payrolling benefits (so tax is deducted via PAYE as they occur) or you include them in a PAYE Settlement Agreement (PSA) where the employer pays the tax on behalf of employees. We recommend you record the value and reason, and include it in end-of-year reporting (if required).
Practical record-keeping and PAYE Settlement Agreements (PSAs)
Clear and consistent administration helps keep things simple and ensures you’re covered if HMRC checks your records. We suggest you take the following steps:
- Keep a register of all voucher/gift card benefits: date given, recipient, cost to you, reason for gift, value of voucher.
- For any voucher over £50 (or where the criteria were otherwise not met), consider using a PSA so you pay the tax/NI for employees. This often simplifies matters rather than asking employees to pay extra tax themselves.
- Decide early whether you will ‘payroll’ benefits-in-kind (so tax/NI deducted through salary) OR submit P11D forms at the year end.
- Review your HR/reward policy: clarify when gift cards are given, to whom, on what basis (occasional, not contractual), then communicate this internally for transparency and fairness.
Frequently asked questions
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Can I give my employees gift cards?
Yes, you absolutely can. Just make sure you comply with the tax rules: keep value under £50 (if under the trivial benefit route), avoid making it a contractual or performance-linked reward, ensure the voucher is not cash equivalent and keep good records.
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Can you buy gift cards for employees and avoid tax?
Yes, in many cases you can avoid tax if the gift card meets the trivial benefit criteria (cost to employer £50 or less, non-cash, not linked to performance, not contractual). If you exceed the criteria, the benefit is taxable, and you must process it through PAYE or P11D.
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Does the £50 rule apply to directors too?
Yes and no. For most colleagues, the trivial benefit rule applies per benefit (max £50), and there is no fixed cap on the number of benefits (provided each meets criteria). For directors (or office-holders) of a ‘close company’ (i.e., five or fewer shareholders), there is a £300 annual cap on trivial benefits. That means a director cannot receive trivial benefits totalling more than £300 from the company in one tax year.
Gifting Asda gift cards to your staff
Whether it’s a Christmas thank-you, a birthday gesture or a simple morale boost, Asda gift cards let your team choose from groceries, home essentials, clothing and more, making every reward meaningful. With lots of gift card options under the £50 trivial benefits requirement, you can celebrate staff without triggering extra tax or reporting obligations.
If you’re ready to make colleague gifting straightforward, cost-effective and truly appreciated, Asda for Business gift cards are an easy choice. They’re simple to order, flexible to use and perfect for any occasion where you want to show thanks.
Explore Asda for Business gift cards today and give your team a reward they’ll actually use.