Date posted: 23rd Jul 2024
Since April 2016, there has been an exemption to cover tax becoming due on trivial benefits.
This was intended to avoid tax becoming due on ad-hoc gifts such as a Christmas present or flowers.
In simple terms, a trivial benefit is classified as:
- One that does not exceed £50 (including VAT),
- One that is not in the form of cash or a cash voucher,
- One that is not a contractual entitlement, and
- One that is not provided in recognition of services performed by the employee as part of their duties.
If the above criteria are met, then the employee can provide the employee with as many trivial benefits as they would like to – so the employer could provide gifts at say Easter, Summer and Christmas to employees without the employee incurring a tax charge.
There is a limitation on a director (or members of their household) whereby the total cap is £300 per tax year.
It is important to remember that a £50 voucher for “employee of the month” or as a reward for good work, will still be a taxable payment, despite it being within the value criteria. This is because such a reward was in recognition of services and the fourth condition above is not met. Therefore the employee may face a tax charge on such a benefit although given the distaste that this may cause, the employer may wish to cover the tax charge, via a PAYE settlement agreement with HMRC.
If you have any queries on trivial benefits, get in touch with one of our Tax experts today.
