As an employer, do you understand the rules surrounding tax on trivial benefits and the differences if trivial benefits are provided as part of a salary sacrifice scheme? Are you sure what is classed as a trivial benefit as opposed to a benefit-in-kind?
It’s confusing – we must admit! But we’re here to make everything become clear… And if you’re still confused then we’re just a phone call away.
A trivial benefit is classed as a small token or gift provided to employees by employers. They may include a bottle of wine, lunch on the company, a hamper of goodies, a gift voucher or any other token of appreciation.
Employers aren’t limited to how many trivial benefits they can give to an employee, providing they follow the rules. If the same benefit is provided over and over again, it may no longer be classified as a trivial benefit.
There are certain caveats that mean you don’t have to pay tax on certain benefits for your employees. These include if:
- It isn’t in the terms of their contract
- It cost you £50 or less to provide
- It isn’t cash or a cash voucher
- It isn’t a reward linked to their work or performance
Benefits that fall into the above, known as ‘trivial’ benefits don’t warrant tax or National Insurance (NI) payments. If the benefits you’re providing don’t meet the criteria above, then you are expected to declare these and pay tax on them.
Something else to be aware of is that you can’t receive trivial benefits of over £300 if you’re a director of a ‘close’ company. A close company is categorised as a limited company with 5 or less shareholders. Each individual benefit must be capped at £50 too.
It’s also important to note that if you provide trivial benefits as part of a salary sacrifice arrangement, that they won’t be exempt from tax, and you’ll need to declare them on a P11D form confirming the higher of either the salary given up or how much you paid for the trivial benefits.
As always, our tax gurus here at Ellacott Morris are ready to manage this and every other aspect of your tax. Simply get in touch and let our experts do their thing!
