A Trivial Benefit continues to be very popular and is frequently given by employers to directors and employees.

What is a Trivial Benefit?

A Trivial Benefit is something that

• It cost you £50 or less to provide (including VAT)
• It is not a reward for their work or performance
• Is not expected by the employee and it isn’t in the terms of their contract
• Effectively acknowledges a personal event relating to the employee
• If it is a retail store voucher, it cannot be convertible into cash
• Is not reimbursed

You have to pay tax on any trivial benefits that don’t meet all these criteria.

Reasons when a trivial benefit can be given

• Christmas
• Easter
• Celebrating Diwali or other festivals
• Anniversary of becoming an employee
• Congratulations on your engagement/wedding/birth of child
• Delighted your child has passed their GCSE’s
• Other similar “events”

What can be given to employees?

• Shop vouchers such as Amazon Vouchers
• Christmas hampers
• Tickets to a concert
• A very good bottle of wine/champagne
• Tickets to a sporting event such as Gloucester Rugby or Bristol Pitbulls
• Lesson for a sport, such as ice skating or skiing lessons
• Taking a group of employees out for a meal to celebrate a birthday;
• Buying each employee a Christmas present or birthday present;
• Flowers on the birth of a new baby;
• A summer garden party for employees (this is on the basis that the benefit per employee does not exceed £50)

You don’t need to pay tax or National Insurance or let HM Revenue and Customs (HMRC) know on Trivial Benefits.  This means these have no P11d tax implication for the employee and are still a tax-deductible expense for the business.

Restrictions

In most instances, an employee can receive multiple trivial benefits throughout the year, as long as each one does not exceed £50. However, where the employer is a close company (which is a limited company with five 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).

Please note Sole traders cannot take advantage of Trivial Benefits for themselves but can for any of their employees.

Non-taxable benefits

As well as Trivial Benefits there are certain other benefits you provide to your employees that are not taxable.  This can be a good way to incentivise staff, as well as being tax efficient from an employer’s perspective.

Some of the most common examples are:-

• Payments for business mileage in an employee’s own car, provided they are within HMRC approved rates (45p per mile for the first 10,000 miles and 25p per mile thereafter). Note any excess paid above these amounts will be taxable
• Employer payments into a registered pension scheme
• Medical treatment to help an employee return to work after an absence (or expected absence) of at least 28 days, up to a maximum cost of £500
• One health screening assessment and one medical check-up per year. Note any follow up treatment is taxable
• Meals provided in a staff canteen and light refreshments at work
• Parking provided at or near an employee’s place of work
• Workplace nursery places for the children of employees and childcare vouchers (if entered in the voucher scheme prior to October 2018). For new parents, information on applying for tax-free childcare can be found at gov.uk/get-tax-free-childcare
• Removal and relocation expenses up to a maximum of £8,000 per move
• One mobile phone per employee, this must be registered in the employers name
• Annual social functions for employees provided that, in any one tax year, the total cost does not exceed £150 per head (including VAT). If it exceeds this the whole amount becomes disallowable.
• Use of a pool car – this is a vehicle made available for use by more than one employee, with very limited private use, which is normally kept at the business premises overnight.
• Expenses that are paid or reimbursed by employers, so long as they were incurred entirely for business purposes. This includes office equipment bought by an employee for home working however this must be discussed in advance. Any significant private use element would be subject to tax and NIC via the payroll.
• Additional household expenses incurred whilst your employee is working from home (e.g. electricity, heating or broadband) can be paid at a flat rate of £6 per week (increased from 6 April 2020).

If you have any questions about this, then please contact us, or for further guidance look at HMRC – https://www.gov.uk/expenses-and-benefits-trivial-benefits