I don’t know how many of you knows anything about trivial benefits.
Many times, as an employer, you may think how to reward your hard working employees, give them something extra, some small token and in present climate save on taxes.
As an employer you can buy your employees small present or give them card gifts. As a result this will be counted as company expenses, but you do not have to report them to HMRC and benefits.
For example:
- Birthday gifts,
- Christmas presents,
- Taking employees for the meal to celebrate birthday.
There are some conditions you have to be met.
CONDITIONS
- Costs £50 or less to provide,
- It isn’t cash or a voucher,
- It isn’t a reward for work or performance,
- It isn’t in the terms of an employee’s contract.
Point 1 is especially important – the cost cannot exceed £50.00
However, if the cost is even 1 penny above the £50 the entire amount is taxable.
In order to avoid any doubts and abusing the benefit HMRC put yearly restriction to £300 per employee.
What is not treated as trivial benefit:
- Working lunch for employees (this is related to their employment)
- Gifts, incentives or events related to performance targets or results
- Gifts, incentives or events in relation to employment services e.g. team-building events
- Taxis when employees work late.
Ltd with directors only
If the company has up to 5 directors the above still applies.
One has to remember that trivial benefits are treated separately to the exemptions to annual parties, rules are explained in my earlier blog.
Need help?
Need an accountant? Call me now!
Similar articles:
Business Entertainment
What is business entertainment and can we classify it as business expenses? What is classified as a business entertainment in relation to the clients: Food and drink Presents Cinema or theatre tickets Sports events tickets Entries to the clubs One would think that if...
CIS – what is it, what for and what to do with it?
CIS (Construction Industry Scheme) is a tax deducted by the contractor from the subcontractor's salary and transferred to HMRC. In other words, it is a tax that must be declared during self-assessment tax return and usually the overpaid amount is refunded....
Grant increase for self-employed
We are in the quarantine again! Thankfully the government took under the consideration situation of self-employed people and decided to increase the grant. Increase is from 55% to 80%. It is for two periods: November 2020-January 2021 February 2021 – April 2021 The...