Who doesn’t love a little treat now and then? Whether it’s a surprise coffee, a birthday gift, or a box of doughnuts to get through the Monday blues, these small gestures can make a big difference to employee morale. Even better, the UK tax system recognises the power of these perks with something called ‘trivial benefits.’ Let’s dive into what they are, why they matter, and how your company can use them to spread some joy while staying tax-efficient.
What Are Trivial Benefits?
In a nutshell, trivial benefits are small perks you can give to employees that don’t get taxed. But of course, HMRC has rules (because they always do):
Cost £50 or less (including VAT) per employee: This is the maximum value per benefit.
Not be cash or a cash voucher: Non-cash vouchers are acceptable.
Not be a reward for work or performance: It should not be linked to the employee’s duties.
Not be in the terms of the employee’s contract: It shouldn’t be a contractual obligation.
As long as these conditions are met, trivial benefits aren’t taxable and don’t need to be reported to HMRC. Nice, right?
Why Use Trivial Benefits?
Aside from the obvious ‘free stuff makes people happy’ angle, trivial benefits offer a few key perks for businesses:
Boost Morale: Small gestures can go a long way in making employees feel valued.
Tax Efficiency: No tax or National Insurance to pay, and no need to include them on P11Ds.
Strengthen Company Culture: They help build a positive, appreciative work environment.
Not sure what counts as a trivial benefit? Here are a few ideas:
Treat the team to coffee and pastries: An impromptu meal costing £20 per person.
Surprise gift cards for local shops (under £50 and not cash-based): A £15 gift card to mark an employee’s special day.
Birthday flowers or chocolates: A £30 hamper during the festive season.
Tickets to the cinema or a local event: A £20 ticket to a local theatre show.
A bottle of bubbly to celebrate milestones: For a special anniversary or family celebration.
Trivial Benefits for Directors
Good news for small business owners: directors of ‘close companies’ (typically small companies with five or fewer shareholders) can also enjoy trivial benefits. There is, however, an annual cap of £300 per director. So yes, you can treat yourself now and then!
Trivial benefits might sound, well… trivial, but they’re a simple and effective way to boost morale while keeping HMRC happy. Just stick to the rules, keep the costs under control, and enjoy spreading a little cheer in your workplace.
Want to make the most of trivial benefits? Let’s chat about how they can fit into your company’s tax strategy.
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‘A little thought and a little kindness are often worth more than a great deal of money.’ – John Ruskin
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