Inspiring Business by Sharing Success

Reminder that trivial benefits won’t be pursued by the taxman if rules are followed

Employers who want to reward staff with tokens of appreciation, or “trivial benefits”, can do so without fear of additional taxation, providing certain rules are followed, accountants Newby Castleman are reminding firms.

The exemption on trivial benefits put in place by HMRC since April 2016 means that bosses can offer small perks to staff without either themselves or the employee suffering tax or National Insurance, but companies must be aware of the conditions under which this exemption applies. Furthermore, the employer can claim tax relief on the cost of the gift.

Annalise Lovett, Partner at Newby Castleman’s Loughborough Office, said, “Employers who want to show their staff some appreciation need to meet the following requirements for the gifts to be tax free.

“Firstly, the trivial benefits must not be a reward for specific services or be in any way contractual - they must be more general. For example, you cannot provide tax-free gifts for staff for doing well on a certain project, but you can give gifts, such as a bunch of flowers or a box of chocolates or cinema tickets, tax-free in response to an external event, like a birthday or a wedding, or simply if the mood takes you. Another good example would be a gift of a turkey at Christmas.

“Secondly, the benefit cannot be in cash, or cash vouchers. Gift cards that cannot be exchanged for cash (which includes most high street stores) are included in the exemption. And thirdly, the cost of the benefit cannot exceed £50 per member of staff, per occasion.

“One final point to bear in mind is that HMRC’s legislation imposes an annual cap of £300 on exempt trivial benefits provided to a company director or office holder, including members of their family or household.”

Annalise concluded, “Trivial benefits can be a great way to boost staff morale, but employers must be aware of these rules if they don’t want to be faced with a tax bill for their magnanimity. If you are uncertain about any of these rules, or any other financial matters, please contact your accountant for more information.”

Newby Castleman is one of the Midlands’ leading independent accountancy firms, with offices in Leicester and Loughborough. It offers a range of specialist financial services, business and tax advice for individuals and businesses. For further information, telephone the Leicester office on 0116 254 9262, the Loughborough office on 01509 263500 or visit the website at www.newbycastleman.co.uk.

 


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