12th March 2018

Could “trivial” benefits be the answer to costly rewards?

HMRC Trivial benefits

According to One4all Rewards, 83% of British bosses want to reward employees regularly with benefits to boost staff morale. The costs of monetary rewards along with potential tax and employers’ national insurance is what deters many employers from doing this.

Therefore, it is worth looking at HMRC’s trivial benefits allowance. This allows employers to reward employees without any tax and NI implications.

These are the following criteria for ‘trivial benefits’:
– must not cost you more than £50 to provide (or an average of £50 per employee if the benefit is provided to a group of employees)
– is not provided to the employee in recognition of a service, employment duties or their performance, i.e. it is a goodwill gesture
– must not be given in the form of cash or a cash voucher; and
– isn’t in the terms of the employee’s employment contract.

Examples of a trivial benefit could be:
– gift voucher or a gift card (these were previously not allowable but this restriction has been removed)
– birthday or Christmas present
– flowers or other gifts on occasions such as marriage, birth of a child or illness
– a bottle (or two) of wine or a hamper.

NB: Where the trivial benefits exemption is properly met, you don’t need to pay any tax or employers’ NI (currently 13.8%). Neither do you nor the employee have to report or declare the benefit to HMRC. All trivial benefits are deductible for corporation tax purposes in the usual way.

Credit: Business Advice Directory