What are Trivial Benefits?
Trivial benefits can be described as small token gifts given by the management of a company to their employees.
For a gift to qualify as a trivial benefit, it must meet certain conditions according to HMRC:
It costs the employer £50 or less to provide.
It isn’t cash or a cash voucher (but gift cards would qualify as long as they are not exchangeable for cash).
The benefit is not provided in recognition of particular services performed (or in anticipation of such services) or as part of their normal employment duties.
It isn’t in the terms of their contract (including under salary sacrifice arrangements).
If any of the above conditions are not satisfied, then the benefit becomes taxable – via a P11D form, PAYE settlement agreement (PSA), or through payroll, also worthy of note is that if the cost of the benefit exceeds £50, then the whole amount will be taxable, rather than just the excess. Close Company
An employee can usually receive multiple trivial benefits throughout the year as long as each one does not exceed £50. However, where the employer is a close company (a close company is a limited company that is run by 5 or fewer shareholders), the exemption is capped at a total cost of £300 in the tax year where the benefit is provided to an individual who is a director or other office holder of the company (or a member of their family or household).
Examples of Trivial Benefits
Based on HMRC’s guidance, some types of examples of trivial benefits are:
Taking a group of employees out for a meal to celebrate a birthday.
A summer garden party for employees.
A birthday present on employees’ birthday.
Flowers on the birth of a new baby.
This is on the basis that the benefit per employee does not exceed £50.
Advantages of trivial benefits
Some of the advantages of trivial benefits are:
A decent allowance: Each employee can receive trivial benefits worth up to £300 per year, but each individual benefit or gift must not cost more than £50.
No tax or any NI payments: Because trivial benefits are considered small, they are exempt.
No notification to HMRC:
Additional wellbeing support: Treat your employees to a spa session, therapy session, massage etc. As long as each cost £50 or less.
No inclusion in employee contracts: Give trivial benefits as and when you like.
Other non-taxable benefits
There are other benefits that you can provide to your employees that are not taxable, this could be a great way to inspire staff, and also be tax efficient for the employer’s perspective.
Employer payments into a registered pension scheme
Annual social functions for employees provided that, in any one tax year, the total cost does not exceed £150 per head (including VAT)
Removal and relocation expenses up to a maximum of £8,000 per move
Expenses that are paid or reimbursed by employers, so long as they were incurred wholly and exclusively for business purposes. This includes office equipment bought by an employee for home working however this must be discussed and agreed/approved in advance.
One mobile phone per employee, registered in the employer’s name.
Meals provided in a staff canteen and light refreshments at work.
Payments for business mileage in an employee’s own car, provided they are within HMRC approved rates.
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Great Post, I didn't even know trivial benefits exsisted!