The recently introduced exemption for trivial benefits provided by employers allows, in certain circumstances, you to provide tax free staff entertainment or make gifts to your staff where the value doesn’t exceed £50.This article explores ways to incentivise your employees with trivial benefits.
It must not be a reward for services
Trivial benefits are things like meals out, staff parties and gifts given to employees for special occasions such as birthdays, weddings or Christmas. However, Trivial benefits cannot be provided in recognition of particular reward for a job well done or a reward such as reaching a sales target. Examples of where an employer may consider paying trivial benefits include:-
- Staff Birthdays
- Faith days
- It’s Friday and the sun is out days
- Special events personal to the employee such as a wedding or birth of their child.
What kind of trivial benefit can be provided?
The benefits can include anything except for cash or vouchers that can be redeemed for cash. Examples of benefits provided by clients include:-
- Christmas Turkey
- Tickets for the theatre/sporting events
- A tennis lesson
- Retail gift vouchers
Is there a limit on the amount of trivial benefits?
For employees there are no limits to the number of times they can receive a trivial benefit in the tax year.
What about Directors of Close Companies?
Unlike regular employees, there is an additional restriction for directors of close companies (companies with 5 or fewer owners or where all shareholders are directors). The director’s tax exemptions are restricted to a total of £300 in the tax year. For directors where the trivial benefit is provided to a member of their family, this is treat is being provided to the director and counts towards their annual £300 exemption amount.
Need help with trivial benefits or your P11D form?
Previously, these benefits would have been declared on the employees P11d, taxed through payroll or report in a PAYE settlement agreement, if the employer was paying the tax and national insurance. Trivial benefits are a benefit in kind that are great for staff morale. As well as providing staff entertainment, you can tailor gifts to suit employees. On top of this, there is a potential reduction in paperwork; it’s rare that we are provided with such attractive tax legislation so why not take advantage? If you are planning your Christmas Party and unsure on the rules, read our guide to how to claim VAT back on your staff Christmas Party.
If you are unsure what trivial benefits you can give to your employees or would like to hear more about how we can help, please do not hesitate to contact us.