Are you taking advantage of tax-free trivial benefits?

Need advice? We can help.Get in touch today

The trivial benefits in kind (BiK) exemption applies to small non-cash benefits like a bottle of wine or a bouquet of flowers given occasionally to employees. By taking advantage of the exemption employers can simplify the treatment of BiKs whilst at the same time offering a tax efficient way to give small gifts to employees.

Although the benefit is defined as ‘trivial’, employers should remember that this offers a great opportunity to give small rewards and incentives to employees. The main caveat being that the gifts are not provided as a reward for services performed or as part of the employees’ duties. However, gifts to employees on milestone events such as the birth of a child or a marriage or other gestures of goodwill would usually qualify.

The employer also benefits as the trivial benefits do not have to be included on PAYE settlement agreements or disclosed on P11D forms. There is also a matching exemption from Class 1A National Insurance contributions.

Conditions for tax exemption

The tax exemption applies to trivial BiKs where the BiK:

  • is not cash or a cash-voucher; and
  • costs £50 or less; and
  • is not provided as part of a salary sacrifice or other contractual arrangement; and
  • is not provided in recognition of services performed by the employee as part of their employment, or in anticipation of such services.

Who qualifies?

The rules allow directors or other officeholders of ‘close’ companies (companies run by five or fewer shareholders) and their families to benefit, but overall payments made in a tax year cannot exceed £300. The £50 limit remains for each gift but could allow for up to £300 of non-cash benefits to be withdrawn per person per year.  The £300 cap does not apply to other employees.

Note that if the £50 limit is exceeded for any gift, the full value of the benefit will be taxable – not just the excess over £50.

Useful information for Are you taking advantage of tax-free trivial benefits?

Charities & Civil Society Organisations

The Charities Aid Foundation has recently published its latest World Giving Index to identify geographical trends in public generosity. 

Read more
Charities & Civil Society Organisations

As a charity, keeping good accounting records is at the heart of both excellence in public accountability and effective decision making.

Read more
Limited Companies

Should a key member of your staff be suddenly unable to work, it might be best to consider how you can reduce the impact of their absence.

Read more
Limited CompaniesSole Traders & Partnerships

Here are the tax implications relevant to providing a gift/event to best please your employees, whilst also being financially sensible.

Read more
Sole Traders & Partnerships

Sole traders & partnerships: If your year-end is not 31 March or 5 April, HMRC is changing how it will assess your profits.

Read more
Limited CompaniesSole Traders & Partnerships

If you’re considering using a piece of cloud-based accounting software, such as Xero, QuickBooks, or Sage, then it’s important you understand what each option can offer you. What follows are some worthwhile considerations…

Read more
wave

I am a...