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Debbie Hancock

Debbie Hancock

Owner of Southbourne Accountancy & Business Services

What are trivial benefits? Should you care?

What are trivial Benefits?

Trivial benefits are best described as small ‘token gifts’, given by management to their employees. This can come in any shape or form but generally speaking, they are typified by gestures such as bottles of wine, chocolates, beer for the office, or team lunches. Essentially little everyday sweeteners that keep the morale of the company up.

Tax on trivial benefits

 

A benefit can be “trivial” and mean you don’t have to pay tax on the benefit for your employee if all of the following apply:

·     it cost you £50 or less to provide

·     it isn’t cash or a cash voucher

·     it isn’t a reward for their work or performance

·     it isn’t in the terms of their contract

You don’t need to pay tax or National Insurance or let HM Revenue and Customs (HMRC) know.

You have to pay tax on any benefits that don’t meet all these criteria.

Salary sacrifice arrangements 

If you provide trivial benefits as part of a salary sacrifice arrangement they won’t be exempt. You’ll need to report on form P11D whichever amount is higher:

·     the salary given up

·     how much you paid for the trivial benefits

What kind of trivial benefit can be provided?

The benefits can include anything except for cash or vouchers that can be redeemed for cash. Examples of benefits provided by clients include:-

  1. Christmas Turkey
  2. Tickets for the theatre/sporting events
  3. A tennis lesson
  4. Retail gift vouchers

Is there a limit on the amount of trivial benefits?

For employees there are no limits to the number of times they can receive a trivial benefit in the tax year.

However for Directors of ‘close’ companies

You can’t receive trivial benefits worth more than £300 in a tax year if you’re the director of a ‘close’ company.

A close company is a limited company that’s run by 5 or fewer shareholders.

The key distinction when defining trivial benefits is that they are not intended to add financial value to an employee’s pay-check. Nor can they be given in lieu of payment. They are trivial in the traditional sense of the word; having little actual value. 

 

4 facts about Trivial Benefits:

1. Price cap

You must bear in mind that any ‘gift’ given as a trivial benefit cannot have cost you more than £50. This is irrespective of how much has been paid for it but rather its market value.

 

2. Non-cash

It has to be a material offering, you cannot simply hand someone a crisp fifty. This also includes any voucher that can be redeemed for cash. This is just too close to being a form of payment and so as a blanket rule, all cash gifts must be recorded and incorporated into the tax.

 

3. It is not a bonus

It cannot replace a bonus. So if someone’s landed you a contract and you give them a voucher, that isn’t a trivial benefit.

 

4.      It is not in their contract

Trivial benefits have to be one-offs or random acts of kindness. There cannot be a formal agreement between employee and employer about their supply and frequency. Again this resembles a type of payment.

 

 

2. Download our free guide on “7 mistakes to avoid – to stop your fitness business running out of cash” https://southbourneaccountancy.co.uk/fitness-ebook/ 

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