What is a Trivial Benefit?
A benefit provided to a Director or employee that is considered ‘trivial’ and is therefore tax-exempt if all of the following conditions are met:
- Cost: The cost to you, the employer, must be £50 or less per benefit.
- Form of Benefit: It cannot be cash or a cash voucher – it must be a voucher for items such as a restaurant or clothing.
- Purpose: This is a gesture of goodwill not a bonus
- Contractual Obligation: It isn’t part of the terms of their employment contract.
If a benefit meets all these criteria, you do not need to pay tax or National Insurance on it, and you don’t even need to inform HM Revenue and Customs (HMRC). It’s a truly administrative-light way to provide a small perk.
If you are unsure on the above please do not hesitate to contact us on 01384 376 964
Directors of ‘Close’ Companies
If you are a director of a ‘close’ company (5 or less Directors), there’s an additional limit to be aware of. In this scenario, you cannot receive trivial benefits worth more than £300 in a single tax year.
Tax Team
Meet our Tax Team, who have a wealth of experience in tax issues. More information can be found at Tax Services and Tax Planning.
Folkes Worton LLP Chartered Accountants
Accounting for the Future