Trivial Benefits; A Quick Guide

If you’re an employer and you provide benefits to your employees, these are usually subject to tax and National Insurance.

HMRC introduced a new exemption for “trivial benefits”. This means that small gifts to employees and entertainment provided to employees are now exempt for tax and NI.

What is a Trivial Benefit?

A trivial benefit is something which:

  • Costs less than £50
  • Is not cash or a cash voucher (Non-cash vouchers do qualify);
  • Is not a reward for particular services or performance
  • Is not set out in the employee’s contract.

Be aware that if the cost is even a penny more than £50 then the whole cost does not qualify for the exemption.

Examples of trivial benefits

The type of trivial benefits that are allowed include:

  • Taking a group of employees out for a meal to celebrate a birthday;
  • Buying each employee, a Christmas present;
  • Flowers on the birth of a new baby;
  • A summer party for employees.

Is there a limit on trivial benefits each year?

Directors of “close” companies can’t receive trivial benefits worth more than £300 in a tax year. A “close” company is a limited company with five or fewer participators (shareholders) who are all directors.

If you would like to discuss trivial benefits in more detail, please contact us using the details provided below.

01908 219100

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Posted in: Accounting, HMRC, Tax