Trivial Benefits - Explained

As we’re fast approaching the festive season, we thought now more than ever is the best time to talk about Trivial Benefits – it is the season of giving after all...

Trivial benefits is HMRC legislation which as long as you abide by a certain list of rules you are able to gift to your employee tax free, national insurance free and you don’t even need to tell HMRC!

So as long as you keep to these guidelines, you can gift absolutely tax free…

If the benefit doesn’t fit the above criteria, then unfortunately, you’ll need to pay tax on it, but if you’re not sure, speak to your accountant and they’ll certainly be able to tell you if its eligible.

There are, however, a few things that could affect the ‘trivial benefit’ including:

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 the form P11D whichever amount is higher:

However, these rules do not apply to arrangements made before 6 April 2017

Directors of ‘close’ companies

Directors of “close” companies aren’t eligible to receive trivial benefits worth more than £300 in total during a tax year (and no more than £50 for each individual benefit). A “close” company is a limited company with five or fewer participators (shareholders) who are all directors.

This £300 limit is separate to the exemption for annual parties, such as a Christmas party.