The end of the year is in sight, so now is the time to start thinking about ways to thank your staff for their commitment over the last 12 months. Whether it’s a small gesture to say “thank you” or a festive treat, you might not be aware that you can give your employees certain perks without them - or your business - facing a tax bill. Enter trivial benefits.
Trivial benefits are a tax-efficient way to boost your staff morale with small gifts, without worrying about tax or National Insurance implications. But before you start handing them out left right and centre, it’s important to understand the rules around what qualifies as a trivial benefit.
What Are Trivial Benefits?
Trivial benefits are exactly what they sound like - small, low-value gifts or perks. HMRC allows businesses to give employees perks worth £50 or less and as long as the benefits meet the criteria, neither you nor your employees will have to pay tax or National Insurance on them.
However, the key is that these perks must be:
Less than £50 in value (including VAT)
Not cash or a cash voucher (gift vouchers are acceptable, but cannot be exchanged for cash)
Not given as a reward for work or performance
Not included in the employee’s contract or part of their regular benefits
So, if you give your staff a box of chocolates or a gift card for their favourite coffee shop and it meets the above criteria, then you are good to go!
Below are some examples of trivial benefits, all within the £50 limit:
A bottle of wine or a box of festive treats
A gift voucher
A bouquet of flowers
Tickets to a local event
Whilst these are small gestures, they show your appreciation without creating a tax headache. However, this appreciation cannot be part of a contractual obligation or linked in any way to an employee’s performance.
As well as the criteria trivial benefits need to meet, it’s important to keep in mind that the £50 limit is per benefit, not per year.
Therefore, you can give multiple trivial benefits throughout the year, as long as each one is less than £50. In practice, this means you can treat your staff to a small gift for their birthday and then later in the year, give them something else during the Christmas period.
If the individual gift exceeds £50, it will no longer qualify as a trivial benefit and you are then subject to paying tax and National Insurance on the entire value - not just the excess over £50.
Trivial Benefits for Directors: What You Need to Know
If you're a director of a limited company and have fewer than five shareholders, the good news is that the trivial benefits rules still apply. However, there is an annual limit of £300 for trivial benefits given to directors. This allows directors to enjoy the same perks as staff, within reason.
It also means that as a director, you could give yourself four £50 gifts throughout the year. As long as the total value doesn’t exceed £300, no tax is due.
Why Trivial Benefits Matter for Businesses
Using trivial benefits is a great way to create a positive workplace culture without breaking the bank. Small perks make your employees feel appreciated and valued, which in turn boosts morale, improves job satisfaction and ultimately helps with staff retention.
From the financial perspective, trivial benefits offer a smart way to reward your staff without the added cost of tax or National Insurance contributions. Plus, as long as these perks are documented and tracked in your accounts, they won’t add any extra complications to your bookkeeping either.
How to Keep Trivial Benefits on Track
While trivial benefits are easy to give, it’s still important to track them properly in your bookkeeping. Here’s are our top tips for how:
Keep receipts for all benefits provided, and ensure each one is under £50.
Record details of the gift, including the date and who received it.
Ensure the benefit meets the criteria—no cash or performance-related gifts.
Doing this will keep your bookkeeping accurate and up to date, which in turn demonstrates compliance with HMRC’s rules, should you ever be questioned.
The Value of Thoughtful, Tax-Free Perks
Trivial benefits might seem small, but they can make a big difference to your team’s happiness - and of course, your business’ tax bill! Offering thoughtful, low-cost perks will not only help to boost morale but also keep your accounts in good shape. By tracking these perks effectively in your bookkeeping, you can take advantage of tax-free gifts without any administrative hassle. Hiring a bookkeeper to help you not only to take advantage of these kinds of benefits, but to ensure they are correctly recorded and in line with HMRC requirements, will ensure you can maximise these opportunities without adding stress.
Long White Cloud Accounting is based in Sutton, South London and serves established limited company service-based clients in the Greater London area. Led by Kath Vincent, we provide high-quality bookkeeping to keep you on top of what’s happening in your business each month. Looking for bookkeeping support? Click below to book a chat with Kath.
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