What are Trivial Benefits?
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Trivial Benefits are gifts, or benefits, given to employees of a Limited Company that have a value of up to £50. There are several conditions applied to them:
- Must cost less that £50 to provide (ie inclusive of VAT)
- Must not be exchangeable for cash (and cannot be cash)
- Is not performance or work-related
- Is not an expected gift (ie is not in the terms of employment, or is a regular gift)
- If the amount exceeds £50, the full amount is taxable as a benefit in kind (ie the £50 isn’t an allowance)
For directors of limited companies, the amount is capped at £300 per tax year.
Trivial Benefits do not need to be declared in a P11d, or indeed reported to HMRC at all.
Some examples of Trivial Benefits:
- Birthday or Christmas gifts
- A dinner out for a team member’s birthday (keep it under £50 per head!)
Some examples of how we have provided Trivial Benefits at Seed:
- When the first lockdown hit, we provided the team with some cookies with a positive message on it
- An advent calendar at the beginning of December
- Running gear for Tamsyn (as a director of the company, gifts are limited to £300….so they are chosen wisely!)
- Amazon vouchers after the summer holidays to help with the Cost of Living Crisis
- Annual Christmas and Birthday presents for all the team
We recommend setting up two Trivial Benefit codes in your Chart of Accounts to keep them separate from anything else. One code for employees and another for directors. This enables you to claim the VAT back easily, and also keep an eye on the amounts paid to directors.