Trivial benefits

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

1. Costs £50 or less to provide,
2. It isn’t cash or a voucher,
3. It isn’t a reward for work or performance,
4. 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.

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