Trivial Benefits, The Little Perks That Might Make a Big Difference
Today, I thought I’d have a quick chat about something that often goes unnoticed but can actually be quite useful, trivial benefits. You might be wondering: “Benefits? Like freebies at work?” That’s right! But there’s a bit more to it than just the free biscuits on the staffroom table.
What are Trivial Benefits, Anyway?
In the world of tax and payroll, trivial benefits are small tokens employers give to staff, which do not cost much and are not considered taxable. Think of it as a small thank you for your hard work, like a Christmas gift or a birthday surprise, as long as it’s below a certain value.
The Rules in a Nutshell
The main points about trivial benefits are:
- They are worth no more than £50 each (per benefit, per employee).
- They are not cash or something that can easily be turned into cash (like prepaid debit cards).
- They are not given as a reward for work performance or as part of a contractual entitlement.
- They genuinely are a ‘little something’, such as a box of chocolates, a bottle of wine, or a mug with the company logo.
And What About Directors?
Now, this is important for those in charge. The rules for trivial benefits also apply to company directors, but with a slight difference. Since directors are considered employees, the same rules around value and nature apply. So, if a director receives a gift worth less than £50, it’s regarded as a trivial benefit and isn’t taxable, but it can only be given 6 times a year.
However, if the benefit is more than £50, the amount over that limit could be treated as a taxable benefit and might need to be reported on the director’s P11D.
So, keep an eye on the value, whether it’s the boss or staff enjoying the treat!
Why Do They Matter?
From a tax perspective, trivial benefits are great because they are free from tax and National Insurance contributions (NICs). It’s a simple way for employers to show appreciation without complicated tax rules getting in the way.
The Perks for Small Businesses and Employees
For small firms and their staff, trivial benefits are an easy way to boost morale. And with the £50 limit, it’s simple to manage, no need for detailed records or worrying about a tax bill. It’s an effective way to spread a bit of cheer without any fuss.
A Few Things to Keep in Mind
Of course, the benefits should stay within the limit. If the value exceeds £50, the excess is taxable, and the benefit must be a genuine ‘little gesture’, not a disguised bonus or a reward for work.
A Quick Tip for Employers
If you plan to give trivial benefits, keep a record of each gift. Keep the receipt. That way, if HM Revenue & Customs asks to see proof, you’re prepared. But as long as you stick within the rules, everything should be straightforward.
In a Nutshell
Trivial benefits are a handy, simple way to add a bit of cheer at work, whether for employees or directors. They’re friendly, low-cost, and tax-efficient, an easy way to keep morale high.