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Do you need to pay tax on gifts received?

19 December 2018

‘Tis the Season for gift giving! But for many influencers, accepting or obtaining gifts from businesses and brands occurs year-round and it can be confusing as to if and what gifts are taxable. To help, we have put together some examples of when gifts would be liable to tax as well as those which are regarded as ‘true gifts’ and therefore not taxable.

When is tax due on a gift?

Tax will be due on a gift if it can be considered a non-cash consideration in exchange for goods or services. The most common example will usually be for promotion of the product.

Examples:

  1. A company contracts you to do a number of tweets promoting a product but instead of paying you in cash they send the product you are promoting e.g. jewellery to the value of the invoice you would have charged.
  2. You have been taken to an event but the tickets come with an agreement to promote the performer through a tweet or a video.

True gifts

A gift isn’t taxable when there is no obligation or expectation for you to provide something in return. These are considered to be true gifts.

Examples:

  1. If a brand sends you an unsolicited gift for review and they have no expectation or control over the content being provided.
  2. If a business contact is entertaining you, for example, an agent or a manager takes you out for a nice lunch.

In reality, it’s a case by case basis. A good rule of thumb is asking yourself: “am I obligated under contract to provide some services in return for this product/service?”.

If you would like further advice on the tax implications on giving or receiving gifts, you can get in touch with one of our team at hello@starboxaccountants.com

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