Employee personal appreciation gift letter

There are very few circumstances in which an employee can receive tax-free cash from an employer. But a gift made “on personal grounds” or as a “mark of appreciation” might be one of them. How do you go about proving this to the HMRC’s satisfaction?

A personal gift

Where cash paid to an employee is a genuine gift in recognition of some personal quality, and is in no sense a reward for performing duties past, present or future, then it can be paid tax-free. HMRC’s instructions (EIM01460 - Employment Income Manual) suggest that to escape liability, possible reasons for the gift might be: “on personal grounds, e.g. a wedding present, or as a mark of personal esteem or appreciation”. Always keep a copy of the covering letter with any such payment to provide evidence, if required, to HMRC. Our Employee Personal Appreciation Gift Letter will serve this purpose.