Trivial Benefits: what are they and what are the rules?

Meeting certain conditions from HMRC when gifting an employee is known as a 'trivial benefit'. You won't need to pay tax or National Insurance or let HMRC know if all of the following apply:

  • The cost of the benefit must not be over £50

  • The benefit isn't cash or a voucher redeemable for cash

  • It isn't a reward for their work or performance

  • It isn't in the terms of their contract

You will have to pay tax on any benefits that don't meet all of this criteria.

If the cost of the benefit is over £50, the whole amount is taxable, not just the excess over £50. If it is a group event, you are allowed to calculate the average cost per employee.

If you're a director of a 'close' company you can't receive trivial benefits worth more than £300 in a tax year. A 'close' company is classed as a limited company run by 5 or fewer shareholders.

If you're thinking of gifting an employee, bare these rules in mind to ensure that you are also benefiting.