According to HMRC, trivial benefits are small and rare gifts or perks for employees. These benefits are so minor that they do not need to be reported for tax purposes.

These benefits are often small gestures of goodwill. Employers use them to reward or appreciate staff. This way, they avoid the usual tax issues that come with larger benefits or salary increases.

Trivial Benefit Details

• Cost Limitations: The benefit cannot exceed £50 (including VAT) per employee per occasion.
• No Cash or Vouchers: The benefit must not be in the form of cash or a cash equivalent, such as gift vouchers or store cards. HMRC specifically excludes cash-based benefits from being classified as trivial.
• Irregular Occurrence: The benefit should be given on an occasional basis, not as part of a regular or contractual entitlement.
• Not a Reward for Work: The benefit must not be given as part of a performance-based reward.

Examples of Trivial Benefits

Here are some examples of benefits that might qualify as “trivial” under HMRC guidelines:

• A birthday card or small gift (such as a box of chocolates) given to an employee.
• A lunch or meal provided on a special occasion.
• A gift voucher or a pampering gift for an employee who is retiring.
• Flowers sent to an employee when they are unwell.

For Employers

Offering trivial benefits can be a great way for employers to show appreciation without complicating their tax filings. When a benefit meets the HMRC criteria, it is not considered a taxable benefit, so:

• There is no need to report the benefit on the employee’s P11D form (which is used to report taxable benefits).
• Employers don’t pay National Insurance contributions on trivial benefits.
• The administrative burden is lower. There is no need for complicated paperwork or calculations for these small gifts or perks.

Director Trivial Benefits

While trivial benefits are exempt for employees, company directors are subject to different rules. Directors of small businesses, with fewer than 5 employees, can also get small benefits under the same rules. If a business has more than 5 employees, there are rules about benefits for directors. The total value of these small benefits is limited to £300 each tax year.

By knowing the rules about trivial benefits, employers can reward employees in a tax-friendly way. Employees can enjoy perks without worrying about taxes. This balance can improve workplace morale, strengthen employer-employee relationships, and enhance productivity, all with minimal red tape.

Next time you think about giving a small gift at work, remember that these gestures can be valuable! The J Sweeney Accountants team can help you with this and other tax services. Call 01604 950034 or email [email protected] to learn more.