In short, yes. An employer can provide a benefit to an employee under the Trivial Benefits rules and it will be free of tax. The employer must ensure the following conditions are met:
- It must cost you, the employer, £50 or less
- It must not be cash or a cash voucher
- It cannot be a reward for work or performance
- It must not be in the terms of their contracts or part of a salary sacrifice arrangement
How do you use Trivial Benefits in the workplace?
The £50 or less value applies to each employee, per benefit and represents the total cost to you, including VAT.
You cannot give cash vouchers which means you cannot give a voucher exchangeable for cash.
The types of benefit you could provide are:
- Flowers or gift for a birthday, anniversary, birth of a child etc
- Post work drinks for your team
- Healthy treats such as fruit baskets
- Team lunches (as long as not a working lunch)
- Bottle of wine
- Box of chocolates
- Flu jab
The benefit must be provided for a non-work reason.
TIP: If the same benefit is provided to several employees you can compare the average cost to the £50 limit.
What doesn’t count as a Trivial Benefit?
It is important to remember that the benefit provided must not be a reward for work or performance. Therefore, if you provide say a lunch because employees are being asked to work their lunch to complete a project, this is not a trivial benefit because they are being compensated for their work.
How often can you provide a Trivial Benefit?
There is no limit to the number of Trivial Benefits you can provide to employees each tax year but care should be taken that remuneration packages are not inadvertently boosted by providing numerous benefits. Benefits are meant to be for non-work related reasons.
Can a director benefit from a Trivial Benefit?
Directors can also receive Trivial Benefits but there is a cap of £300 per tax year if the director is a director of a close company.
A close company is a company controlled by 5 or fewer shareholders, or where any number of directors are also shareholders. This rule will apply to many Owner-Managed businesses.
What happens if a benefit exceeds the £50 limit?
If the benefit exceeds £50 the whole cost is taxable. You will have to deal with this either through the Benefit in Kind rules (or P11d as they are more commonly known), or potentially you may have an agreement with HM Revenue and Customs to include within a PAYE Settlement Agreement or through payrolling the benefit.
If this situation arises you need to seek professional advice to ensure the tax and national insurance implications are correctly calculated and reported.
Links
Tax on trivial benefits – GOV.UK
The information provided is correct at the time of publishing but you should always seek up to date advice as tax legislation and rates can frequently change.
Author: Helen Griffiths, Accounts and Audit Manager, Plus Accounting
Any views or opinions represented in this blog are personal, belong solely to the blog owner and do not represent those of Plus Accounting. All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site
Date published: 04 March 2022