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What are Trivial Benefits?

Are you looking for a way to treat yourself or your employees and reduce your tax bill? Then you need to know about Trivial Benefits. Under HMRC rules you are able to provide gifts up to the value of £300 a year to directors and employees, at £50 a time, tax free.

You don’t have to pay tax on a benefit for your employee if all of the following apply:

  • it cost you £50 or less to provide
  • it isn’t cash or a cash voucher
  • it isn’t a reward for their work or performance
  • it isn’t in the terms of the contract

This is known as a ‘trivial benefit’. You don’t need to pay tax or National Insurance or let HM Revenue and Customs (HMRC) know.

If you do exceed the £50 limit on a trivial benefit, even by a small amount, the total value of the benefit – and not only the excess – will have to be taxed through the payroll. Trivial benefits also can’t be lumped together. They can’t claimed as an annual allowance for corporation tax relief and they will only be considered where you have a receipt for each individual benefit.

You can’t receive trivial benefits worth more than £300 in a tax year if you’re the director of a ‘close’ company. A close company is a limited company that’s run by 5 or fewer shareholders.

Some examples of what counts as a trivial benefit are:

  • A night out at a restaurant to celebrate completing a project
  • Throw a garden party for staff and their partners
  • A gift of flowers for a birthday, special anniversary, birth of a new baby
  • Store gift cards
  • Annual gift for each employee at Christmas or other significant event

The limit is per employee/director (or officer) so a husband and wife can receive up to £300 of ‘trivial’ benefits as a couple if they are a director or secretary for the company.

These trivial benefits allowed as well as the annual staff entertaining allowance of £150 per year for each employee. This helps increase employee morale, and reduces your corporation tax liability. So get out there and treat yourself and your employees while reducing your tax burden!

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