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December 26th 2019

Tax exemption for "trivial" benefits provided by your employer

There will be occasions when you may wish to provide small gifts to employees, throw a staff function or even treat yourself as the director.

Since April 2016, the rules have changed, meaning that employers can now provide trivial benefits such as small gifts and entertainment without having to include these within PAYE settlement agreements or disclose on P11D forms.

The new rules allow greater flexibility, however there are some small changes you need to be aware of, to make sure you don’t get stung!

The following conditions must be adhered to in order to be able to provide tax-free trivial benefits.

The benefit must not:

  • Exceed £50 (this applies to each time you provide a trivial benefit);
  • Be a cash payment, however gift vouchers are allowed, providing they can’t be exchanged for cash;
  • Be part of any contractual obligation; or
  • Pay for services that are performed as part of regular employment duties.

Trivial benefits for directors

If you are a director then you will still be able to receive trivial benefits, as well as providing these to family members. Please bear in mind the above conditions as these will all still apply. As a director, there is an annual cap of £300. If you do provide trivial benefits to other family members who are not employees or directors, these will be included as part of your directors’ allowance for the year.

Examples of what you can do to treat yourself and your employees include: store gift cards (including for example the new Kirkwall BID gift cards); flowers, chocolates, wine, hampers, or even taking staff out for a meal.

These trivial benefits are in addition to the annual staff entertaining allowance of up to £150 per annum per attendee and therefore will help increase morale, whilst reducing your corporation tax liability.

Find out more about our corporation tax services here.

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