Benefits are a great way of boosting morale within your workforce as well as helping enhance staff wellbeing. Trivial benefits allow you to provide a tax free and National Insurance free benefit to your employees as many times in a year as you like (apart from company directors and family members) – without having to let HMRC know. Employers are also able to claim income/corporation tax relief on any costs involved, however there is a strict criterion for this.
Tax-Free Benefit Criteria:
- The benefit must not cost any more than £50 (including VAT)
- The benefit must not be cash, or a voucher that can be redeemed for cash
- The benefit must not be given as a reward to an employee if they have carried out particular services (for example, you should not reward an employee with a benefit if they have gone above and beyond on a project)
- The benefit should not be in the terms of an employee’s contract
- The benefit must not form part of a salary sacrifice arrangement
For company directors or office holders of ‘close’ companies, they are kept to a limit of £300 for trivial benefits that they are able to receive in one tax year, including benefits that are given to family or household members who aren’t directors or employees of the related company. Family members who are also directors are also given their own £300 limit.
If you’d like to discuss trivial benefits or would like to see how else you could work tax efficiently, please get in touch with us at email@example.com