Trivial Benefits: Small Perks, Big Smiles
As a business owner, showing appreciation for your team is important. But did you know you can offer small perks to your employees (or even yourself if you're a director!) without triggering tax or National Insurance? Let’s explore trivial benefits—a tax-efficient way to spread a little joy.
The Rules for Trivial Benefits
For a perk to count as a trivial benefit, it must meet all of the following conditions:
The cost is £50 or less per benefit (per day)
It isn’t cash or a cash voucher.
It isn’t a reward for work or performance.
It isn’t expected or part of the employee’s contractual entitlement.
If these conditions are met, there’s no tax, no National Insurance, and no reporting to HMRC. Simple!
What’s In (Allowed)
These examples meet all the HMRC rules:
A £40 massage voucher for an employee’s birthday.
It costs less than £50, isn’t cash, and isn’t a reward for work performance.
A box of chocolates for staff during the festive season.
It’s a modest, one-off gift with no connection to work performance or contracts.
A meal out for a leaving employee, costing £250 in total for six employees (£41.67 per head).
The cost per head is under £50, and it’s a farewell gesture not tied to performance.
What’s Out (Not Allowed)
These examples fail one or more of the HMRC criteria:
A £60 Amazon voucher for hitting a sales target.
It exceeds the £50 limit and is tied to work performance.
A £20 cash gift for an employee’s birthday.
Cash is never considered trivial, regardless of the amount.
A monthly team lunch provided by the company.
It’s a regular and expected benefit, making it part of the employee’s working conditions.
A £45 gift card provided as a year-end bonus.
It’s a reward for work performance and therefore taxable.
Close Company Directors: The £300 Cap
If you’re a director of a ‘close’ company (a limited company controlled by five or fewer shareholders), there’s an annual cap of £300 on trivial benefits you can personally receive. This cap doesn’t apply to your employees—so feel free to spread the goodwill!
Can You Claim VAT on Trivial Benefits?
Yes, if your business is VAT registered you can claim back the VAT on trivial benefits, provided they’re for business purposes (such as boosting morale).
Why Trivial Benefits Matter
Trivial benefits may be small in value, but they can make a big difference in building goodwill, boosting morale, and creating a positive work culture. A little gesture can go a long way, especially when it’s tax-free!
If you’d like further advice on trivial benefits or other business expenses, get in touch—we’re always here to help.