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Published on 25th April 2022
What are called ‘trivial’ benefits, are far from trivial. They can make a very worthwhile add-on to remuneration, allowing you to provide a benefit to an employee with no tax, no National Insurance: and no need to notify HMRC. There’s no limit on the number you can provide in a year – except for company directors and family members. But strict criteria apply.
Critical Small Print
A benefit must meet the following conditions. It must not cost more than £50 (including VAT) and not be cash or a voucher that can be redeemed for cash. It must not be a reward for particular services carried out by the worker and should not be in the terms of the worker’s contract. Neither can it form part of a salary sacrifice arrangement.
HMRC maintains that repeated provision of a benefit could create a legitimate employee expectation. This could then be viewed as a contractual arrangement which would fail to qualify.
Getting it Right for Company Directors
There’s a £300 limit to the trivial benefits that directors or office holders of ‘close’ companies (limited companies run by five or fewer shareholders) can receive in any one tax year.
This includes benefits given to family or household members who aren’t directors or employees of the company.
But if other family members are also directors, they have their own £300 limit.
If you require further assistance, please do not hesitate to get in touch.