The Truth Behind Trivial Benefits

Date: 18th October 2019

With effect from 6 April 2016, legislation was introduced to UK businesses to help simplify the way that smaller employee benefits are administered. This has in turn saved a lot of time for businesses with not needing to spend time completing unnecessary paperwork for HMRC.

The Truth Behind Trivial Benefits

What counts as a Trivial Benefit?

There is no charge to tax and NIC on trivial benefits provided to an employee which satisfy the following conditions:

  • The cost does not exceed £50 (or £50 per person in the case of a benefit provided to several employees at once)
  • The benefit does not consist of cash or a credit token (including the use of a credit card) however, gift vouchers are acceptable
  • No salary sacrifice is involved
  • Provision of the benefit is not linked to any services provided by the employee
  • The employee is not contractually entitled to the benefit

Trivial benefits are not required to be reported on a P11D.

Examples of Trivial Benefits

Examples given by HMRC include:

  • Tea and coffee provided to employees
  • Small gifts of a personal nature (such as flowers on the birth of a child)
  • Small seasonal gifts

Other examples:

  • Buying Birthday or Christmas presents for staff
  • Token gestures such as a bunch of flowers, wine, chocolates for a special occasion.
  • Retail gift vouchers
  • Tickets for theatre shows

Is there a limit on the amount of Trivial Benefits?

There are no limits for employees to the number of times they can receive a trivial benefit in the tax year.

However, an annual cap of £300 applies to directors or other office-holders of close companies including family members (a close company is a limited company that’s run by 5 or fewer shareholders).

Points to be aware of:

  • If the benefit cost exceeds £50, the benefit then does not apply, and the full amount is taxable (not just the excess over £50).
  • If a benefit is to be provided to a group of employees and it’s not viable to work out the cost per person. Instead, you can use the average cost per employee to meet the £50 limit.
  • It must be used to incur a cost. You cannot just claim this benefit at the end of the year without spending money. If HMRC investigates, you would need proof that it is a gift.
  • It is important to remember that these trivial benefits are in addition to other benefits that can be claimed through a limited company. With Christmas fast approaching, if you are considering a function or event, each employee is entitled to £150 per year but this cost cannot be exceeded, otherwise it will be disallowed.

The Truth Behind Trivial Benefits

What counts as a Trivial Benefit?

There is no charge to tax and NIC on trivial benefits provided to an employee which satisfy the following conditions:

  • The cost does not exceed £50 (or £50 per person in the case of a benefit provided to several employees at once)
  • The benefit does not consist of cash or a credit token (including the use of a credit card) however, gift vouchers are acceptable
  • No salary sacrifice is involved
  • Provision of the benefit is not linked to any services provided by the employee
  • The employee is not contractually entitled to the benefit

Trivial benefits are not required to be reported on a P11D.

Examples of Trivial Benefits

Examples given by HMRC include:

  • Tea and coffee provided to employees
  • Small gifts of a personal nature (such as flowers on the birth of a child)
  • Small seasonal gifts

Other examples:

  • Buying Birthday or Christmas presents for staff
  • Token gestures such as a bunch of flowers, wine, chocolates for a special occasion.
  • Retail gift vouchers
  • Tickets for theatre shows

Is there a limit on the amount of Trivial Benefits?

There are no limits for employees to the number of times they can receive a trivial benefit in the tax year.

However, an annual cap of £300 applies to directors or other office-holders of close companies including family members (a close company is a limited company that’s run by 5 or fewer shareholders).

Points to be aware of:

  • If the benefit cost exceeds £50, the benefit then does not apply, and the full amount is taxable (not just the excess over £50).
  • If a benefit is to be provided to a group of employees and it’s not viable to work out the cost per person. Instead, you can use the average cost per employee to meet the £50 limit.
  • It must be used to incur a cost. You cannot just claim this benefit at the end of the year without spending money. If HMRC investigates, you would need proof that it is a gift.
  • It is important to remember that these trivial benefits are in addition to other benefits that can be claimed through a limited company. With Christmas fast approaching, if you are considering a function or event, each employee is entitled to £150 per year but this cost cannot be exceeded, otherwise it will be disallowed.

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