Charities SORP: Gifts from parents - a hidden liability?

As we reach the end of the school year, many staff will find themselves in receipt of thank you gifts from parents.

Benefits provided to an employee by someone other than the employer can be taxable on the employee if they are provided by reason of the employment. Gifts costing less than £250 (in total from a single donor in a tax year) are however exempt where certain conditions are met:

  • the gift consists of goods or a voucher or token only capable of being used to obtain goods (not cash); and
  • the person making the gift is not the employer or a person connected with the employer; and
  • the gift is not made either in recognition of particular services in the course of their employment or in anticipation of particular services which are to be performed; and
  • the gift has not been directly or indirectly procured by the employer or by a person connected with your employer.

The third bullet point could make a gift from a parent potentially taxable depending on the terms under which the gift is given.

The school as the employer is not however responsible for reporting this gift unless they have arranged or facilitated the award in any way. The employees should be reminded of the potential tax liability arising on these gifts (reportable under self-assessment).

Consideration should be given to the other implications of staff receiving extravagant gifts, (such as whether it can be construed to be bribery) and all schools should have a clear policy for the receipt of gifts. This might take the form of a gift register and the requirement for all staff to discuss offers of gifts or hospitality with their head of department.

Please contact Heather Wheelhouse or Nick Sladden, or your usual RSM contact to discuss further.