Latest blogs from Pomroy Associates

A Guide to Trivial Benefits for Employers

For employers looking to provide small tokens of appreciation to employees, understanding Trivial Benefits can be highly advantageous. These tax-exempt perks are an excellent way to motivate staff without the added tax burden. Here’s a guide to how Trivial Benefits work, with examples, and other common non-taxable benefits that could make a difference to your business.

What is a TrivialBenefit?

Under HMRC guidelines, Trivial Benefits are small gifts or perks given to employees that are exempt from tax and National Insurance. However, for a benefit to qualify as “trivial,” it must meet the following criteria:

1. Cost: The value must be £50 or less, inclusive of VAT.
2. Non-Cash: The benefit must not be cash or a cash voucher.
3. Not Linked to Performance: It must not be given as a reward for work or in recognition of performance.
4. Non-Contractual: The benefit cannot be part of any contract or regular entitlement.

Meeting these criteria ensures the benefit remains tax-free for the employee and the employer.

For more details on these criteria, please refer to the HMRC guidelines on Trivial Benefits.

Examples of Trivial Benefits

To illustrate how Trivial Benefits can work in practice, here are some popular examples:

• Seasonal Gifts: Giving items like a bottle of wine, box of chocolates, or flowers to mark a holiday, birthday, or other special occasion.
• Small Celebrations: Recognising personal milestones, such as a wedding or the birth of a child, with a small gift.
• Team Meals or Outings: Providing informal team lunches or social outings, provided each employee’s portion costs £50 or less.
• Gift Cards (Non-Cash): Offering store-specific gift cards, such as those for a coffee shop or a retail store, within the £50 limit.

Remember, each Trivial Benefit must be assessed individually. Forexample, a celebratory lunch costing £45 per person qualifies. However, if thecost rises to £55 per person, the benefit would no longer meet the TrivialBenefit criteria and could be subject to tax and National Insurance.

There is no restriction to the number of Trivial Benefits an employee can receive during the tax year.

Limitations for Directors and Their Families

Unlike employees, Directors and their family or household members may only receive up to £300 of Trivial Benefits in a tax year. If benefits exceed this £300 threshold, tax and National Insurance will apply. This is particularly important if you are a director offering TrivialBenefits to family members or those within your household.

Additional Non-Taxable Benefits

In addition to Trivial Benefits, HMRC also allows for various other non-taxable benefits, which can be valuable to employers seeking to provide additional support without added tax liabilities:

1. Mobile Phones: Providing one mobile phone per employee for personal or business use.
2. Workplace Parking: Offering on-site or near-site parking for employees.
3. Cycle-to-Work Scheme: Providing access to bicycles and cycling equipment through a government-approved scheme.
4. Eye Tests: Covering the cost of eye tests for employees who use display screens for their work.
5. Mileage Allowances: Reimbursing business mileage at HMRC’s approved rates.
6. Relocation Expenses: Offering tax-free assistance up to £8,000 for employees relocating for work.
   ‍‍

Each of these benefits has specific criteria to be met to ensure they remain non-taxable. We recommend discussing these options with a professional to ensure compliance and correct implementation.

Why Trivial Benefits Are Good for Business

Offering Trivial Benefits and other non-taxable perks allows employers to express appreciation, improve morale, and foster a positive workplace culture, all while keeping costs down. However, it’s essential to stay within HMRC guidelines to avoid unexpected tax and National Insurance liabilities.

At Pomroy Associates, we advise businesses on all aspects of employee benefits and tax planning. Our team is here to support you with expert guidance to help you structure effective and compliant benefits for your workforce.

For more information on Trivial Benefits, to speak with one of our team about your specific needs, or one of our other services, please contact us