📍 The Not so 'Trivial' Tax Free Benefit 📍

A little known and underused tax free perk is the trivial benefits exemption.

A benefit provided to an employee is classed as a trivial benefit and therefore tax free for not only them, but a tax deduction for the employer too, provided that;

✔️ It is less than £50, if given as a voucher it is non-cash transferable,
✔️ It is NOT a reward for services,
✔️ And, it isn't included in the terms of an employee’s contract.

Examples 👀

Trivial benefits could include, a gift voucher, a bunch of flowers, taking a group of employees out for a meal to celebrate a birthday (as long as it doesn’t exceed £50 incl VAT per head).

To avoid the reward for service rule, the benefits could be given for a birthday, or a turkey or bottle of wine at Christmas, the birth of a child or a bereavement.

There is no limit to employees! 😲

HMRC’s legislation does not state how many times per year you can give a trivial benefit to your employees. But be wise! Obviously a £50 gift every working day of the year would ring HMRC's alarm bells so we would advise that any trivial benefits made in the year are made as a gesture rather than a frequent payment.

An does this apply to company directors too? 👀

Yes it does! To limit company directors taking advantage of this tax freebie, HMRC will allow trivial benefits provided to directors up to a value of £300 per year. So that’s a payment up to £50 once every two months. If your spouse is also a director that is another saving of £300 from your tax bills. 💰

You’ll need to declare and pay Tax & NI on anything above e.g. £51 will mean the full amount not deductible and is reportable through P11D/PSA or payroll as benefits.

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Please note, all our content is for general guideline only, every case is different and we would recommend speaking to us before taking any action as a result of the content. The content was correct at the time it was published.