Owner-Managed Businesses

Trivial Benefits

A trivial benefit is a tax-free gift that an employer can give to its employees occasionally. Not only is it exempt from tax and NICs but you don’t even need to let HMRC know about the benefit if it satisfies the criteria below of being deemed a true trivial benefit.

4th November 2022

What constitutes 'trivial'?

To be trivial the benefit must:

  • Cost less than £50 per item – actual cost not an average cost per item if multiple benefits given
  • Not be cash or a cash voucher
  • Not be a reward for work or services performed
  • Not be in the employee’s contract
  • Not be part of a salary sacrifice scheme

If these criteria are not met, then the benefit is not deemed trivial and will need to be reported on a P11D and taxed accordingly.

An example of a trivial benefit is a bottle of wine or a meal out for an employee’s birthday, as long as it’s less than £50.

Directors of a close company

A close company is a limited company that’s owned by a maximum of 5 shareholders. Directors of a close company can only receive 6 trivial benefits each tax year in order to keep the benefits within the trivial bracket. The benefits must still satisfy the above criteria of a trivial benefit.

The company also gets Corporation Tax relief on the cost of the trivial benefits (which could be worth up to 25% – depending on your company’s taxable profit level)

Although trivial benefits provide a relatively minor tax saving, trivial benefit rules are worth considering if you want to give small gifts to your company’s employees or to yourself as a director.

If you need more information, please speak to your usual OM contact or click here…