Trivial Benefits is still one of the most popular topics we get asked about! Let’s refresh ourselves with a quick recap about how it works…
What are Trivial Benefits?
Trivial Benefits are a perk or token of appreciation. These can be given as an employer, without incurring tax. Offering your employees a treat, which cost you less than £50 per head, from time to time can be exempt but if it is given as an inducement or reward for work it is not. So, offering employees a drink in a bar on a hot day is exempt, but offering the same if they come in to work overtime is not.
As the name suggests, the benefit is something small and is not to be confused with ‘benefits in kind’. These are more substantive and can include a company car, gym membership etc. which are taxable benefits.
As per HMRC’s guidance, some types of Trivial Benefits are:
- taking a group of employees out for a meal to celebrate a birthday
- buying each employee a Christmas or Birthday present
- flowers on the birth of a new baby
- a summer garden party for employees
You don’t have to pay tax on a benefit for your employee if all of the following apply:
- it costs you £50 or less to provide
- it isn’t cash or a cash voucher
- it isn’t a reward for their work or performance
- it isn’t in the terms of their contract
This is known as ‘Trivial Benefit’.
You don’t need to pay tax or National Insurance or let HM Revenue and Customs (HMRC) know.
You have to pay tax on any benefits that don’t meet all these criteria. If you’re not sure whether a benefit counts as a ‘Trivial Benefit’ you can contact us today and we can help you.
There is no limit to how many gifts of Trivial Benefit you can give to an employer, however there is a limit of 6 for a director and their family. This can’t be worth more than £300 in a tax year if you’re the director of a ‘close’ company.
A close company is a limited company that’s run by 5 or fewer shareholders.
Trivial benefits are in addition to the ‘annual event’ or staff entertaining allowance you can claim as a director. This is currently set at £150 per head and includes the cost of food & drink, accommodation and transport. As long as you follow the rules for Trivial Benefits, they can be great for boosting morale in the workplace. They don’t have to cost a fortune and can be claimed as corporation tax relief. The amount may be relatively trivial but in terms of showing your appreciation to your staff, a little can go a long way.
It is worth remembering that if you provide Trivial Benefits as part of a salary sacrifice arrangement, they won’t be exempt. You’ll need to report on form P11D whichever amount is higher.
- the salary given up
- how much you paid for the trivial benefits
Something to bare in mind…
We are more than happy to help you understand Trivial Benefits, so if you have any questions, please call us today on 01509 816150 or use the contact form below.
You can also visit the GOV.UK website for further information.