Legislation was introduced in 2016 to provide a statutory exemption from tax for qualifying trivial benefits in kind costing £50 or less.
Qualifying conditions
- No more than £50 per benefit (or average of £50 if the benefit is provided to a group of employees).
- Not cash or a cash voucher (but gift vouchers e.g. for a shop, are allowed).
- There is no entitlement to the benefit as part of the employee’s contract (including salary sacrifice schemes).
- It is not provided in recognition of a work related service or employment duty.
- In close companies there is a limit on the total trivial benefits exemption of £300 per tax year (6 April to 5 April) per director (or office holder). Normal employees don’t have this £300 limit.
Where a close company director has the £300 per year limit, any benefits provided to their family or household members are also included within this limit.
Examples
- Taking a group of employees out for a meal to celebrate a birthday
- Buying each employee a Christmas present
- Flowers for your wife
- A summer garden party for employees
Tax
The tax exemption applies to the tax that the employee would suffer due to benefits in kind. The cost of the benefit also remains tax deductible for the company.
IMPORTANT
- Make sure you do not go over the £50/benefit or £300/tax year limits
- There needs to be an actual expense to the company, no cash withdrawals or estimates
- When adding these expenses to your expenses page, please use the description – ‘Staff costs – trivial benefit’ so that they can be correctly allocated
- Categorise the expense as ‘Admin – Staff related costs’
This is a great opportunity to get an additional £300 from your company each year, without having to pay any additional personal taxes (Provided you keep within the qualifying conditions).
The easiest way that we can see to do this – buy a £50 gift voucher for your favourite store (Amazon, John Lewis, Boots etc) directly from the company every 2 months.
And remember – enjoy your benefits 🙂