Small gestures matter and whether it’s a festive treat, a holiday gift or going for lunch with the team, for many business owners, the concern is always tax – how do you give perks without triggering extra tax or admin work? That’s where “trivial benefits” come in.
“Trivial benefits” are small, non-cash perks you can give to employees (including directors) that may be completely tax-free if they meet certain criteria.
Tom has prepared the below video which explains the rules nicely but if you want to see it in black and white, HMRC’s guidance can also be found below.
If you’re not already maximising your trivial benefits quota each year and want to know more, please get in touch through our contact form.
HMRC – Tax on trivial benefits
You don’t have to pay tax on a benefit for your employee if all of the following apply:
- it cost 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 a ‘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 call the employer helpline.
Salary sacrifice arrangements
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
These rules don’t apply to arrangements made before 6 April 2017 – check when the rules will change.
Directors of ‘close’ companies
You can’t receive trivial benefits 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.