Trivial Benefits
Rewarding staff can be done in various ways, but care should be taken to avoid triggering unwanted tax bills on either the company or the individual. A benefit is trivial so long as all of the following apply:
- It costs £50 or less to provide
- It is not cash or a cash voucher (note – store card vouchers are fine)
- Is not a reward for work or performance
- Is not contractual
So a birthday treat if less than £50 is ok. However, if it is in recognition of a project well done or perhaps a promotion – unfortunately this would be reportable. Long service awards – same.
Similarly, regular office lunches (just sandwiches, nothing too fancy) sound like they qualify – no, not if there is a pattern of reward. In that example, those Friday cafe or Deliveroo runs would need adding up for the year, per employee, and comparing to the criteria.
There is no limit to the amount of trivial benefits an employee can receive (remember, directors of close companies cannot receive trivial benefits of more than £300 in a tax year) but as the examples cited above demonstrate, more than a handful of instances in any given period will likely be hard to justify!
If, whether intentionally or not, you provide non-trivial benefits, these can be reported to HMRC either via form P11d (Benefits in Kind, where the employee shares in the tax hit) or via a PAYE Settlement Agreement (where the company foots the entire tax and NI bill). Either way, what at the time might feel like a genuine, cost effective gesture, can later have an expensive sting in the tail!
Note that there are other reliefs, such as Office Canteen allowances and Annual Functions Allowances (that’s the £150 per head one) – these can be considered separately to Trivial Benefits.
