Given the recent interest rate increase and continually escalating cost of living – not to mention those energy prices – you may well be wondering how to downsize your Christmas spending.
Well, if you run a limited company, there is a tax deductible gift card you can buy to treat yourself and loved ones.
The One4all gift card can be used as a trivial benefit – a tax deductible expense.
But while it’s pretty straightforward to use, there are some notable downsides.
And there are also some rules around how it all works. Here’s what you need to know.
How trivial benefits work
If you run a limited company, it’s well worth taking advantage of your trivial benefits allowance – currently up to £300 per employee per year.
It’s basically a tax deductible expense that you can claim against your profit.
The benefit doesn’t have to be a gift card – it can be anything from a meal out to a present at Christmas.
However, it must comply with the following four criteria:
- The cost of providing each benefit to the business is less than £50
- It isn’t a cash or a cash voucher (something that can be exchanged for cash)
- It isn’t tied to work performance, that is, it’s not a reward or bonus
- It isn’t a benefit stipulated in an employee’s contract
It’s a great way to treat employees or, if you’re a sole director, to treat yourself.
Unlike bonuses or other benefits that you run through the payroll, you don’t have to pay employer’s income tax or national insurance on it so from a business perspective, it’s a relatively cheap perk.
What is a One4all gift card?
I’m not a big fan of gift cards in general because they usually have an expiry date (more below).
There’s also little protection if the company issuing the card goes bust.
One4all is a little different though as it’s provided by an e-money issuer that’s regulated by the Financial Conduct Authority (FCA).
Think of it as a prepaid cash card that you can only spend in certain shops.
The e-money status means certain safeguarding processes are in place and if the company goes bust, you should still have access to your money.
Benefits of a One4all gift card
The main benefit of a One4all gift card is the flexibility – you can redeem it at over 120 retailers, in store and online, rather than being shackled to just one.
Each card can be loaded with as little as £10, or up to the value of £50 (to stay a trivial benefit).
It has a barcode at the back that can be scanned in store, or you can load it into the dedicated One4all app to use your phone’s NFC feature.
Or to use online, you just enter the card number, expiry date and CVV number – just like a credit or debit card.
For larger purchases, be aware that a gift card doesn’t come with the same sort of financial protection as a credit or even debit card.
So if a retailer goes bust before you get your goods, you may be left out of pocket.
Downsides of One4all gift cards
As you may have gathered from above, One4all gift cards also have a sort of expiry date.
Or more precisely, you can use it fee free for 18 months from the day you purchase it.
After that, there’s an admin fee of 90p per month that’s automatically deducted until your balance reaches zero.
It’s not a problem if you plan to use it straight away – but if you wait then you might end up with less money than you put in.
When you’re using the card for online purchases, the value of your basket has to be lower than the balance on your card as most retailers won’t accept payment from multiple sources.
Unfortunately, because the cards have a maximum balance of £50 (to stay a trivial benefit), in some cases it means you won’t meet the minimum spend requirements for free delivery.
And if you’ve already spent some of your card, your balance may be too low to buy anything online, in which case you’ll only be able to spend it in store.
Is a One4all gift card worth it?
It’s a mixed bag.
Say you’re the director of your own company, and you don’t use any other trivial benefits, then £300 worth of gift cards a year is a pretty nice treat to gift yourself.
The gift card is tax deductible – an expense – so it can potentially lower your tax burden.
You can spend it on whatever you like, as long as it’s available from one of the participating retailers.
There’s also nothing stopping you from re-gifting it to someone else.
From that perspective, it’s a great benefit, especially at Christmas.
However, for those who don’t want to spend it straight away, the 18 month deadline for admin fee can swing round quicker than you think.
And for those who only shop online, spending it to the last penny can be a bit of a hassle.