A Guide to Trivial Benefits

There’s no better feeling than making your money stretch that little bit further. Trivial benefits are a great way to reward employees, without impacting your bottom line. But what are the rules around trivial benefits?

What are trivial benefits? 

Trivial benefits are tax free gifts that can be given from a company to its employees. The gifts are tax free and exempt from National Insurance contributions, nor do you need to inform the HMRC that you have received or given one. However, there are value limits to trivial benefits as well as limits on how often they can be given.

Trivial benefits have always been a part of the workplace, most commonly in the form of tea, coffee, biscuits or even a birthday gift for employees. 

Trivial benefits must not be confused with ‘benefits in kind’, which are bigger, more substantial items given to employees which are taxable. Examples of benefits in kind include company cars, private health insurance, tuition or education subsidies amongst many other perks available to employees.

What are the rules for trivial benefits?

There are a number of rules for giving out trivial benefits including: 

  • The benefit value cannot exceed £50.
  • The benefit cannot be provided as cash payment. Gift vouchers of the £50 amount can be gifted provided it is not exchangeable for cash.
  • The benefit must not be given as part of an agreed salary sacrifice with the employee. 
  • The benefit must not be included within the terms of your employee’s contract.
  • The benefit cannot be given as a reward for an employee’s performance.

If any benefits given do not meet these criterias, they will need to be declared on a P11D and the employee will be required to pay tax on the value of it. If you’re unsure whether a benefit falls into the trivial benefit category, you can call the GOV UK Employer Hotline.

How do trivial benefits affect company directors?

If you are the director of a close company (a limited company with five or fewer participants), there are no limits to the number of trivial benefits you give, provided they do not exceed £50 or £300 in total across 12 months.

Directors can also provide trivial benefits for family members and members of their household, provided all criteria above are met. These claims are taken as part of a director’s tax year allowance. Trivial benefits are not a part of staff entertainment allowances.

Want to make the most out of trivial benefits? We can help!

Overall, trivial benefits are a great way to help improve confidence and morale amongst your employees and won’t make a massive dent in your company’s bottom line. If you’re looking to make the most of trivial benefits or you’re unsure whether your company qualifies for them, be sure to get in touch with our team.