If you’re considering a festive treat for your team this Christmas, it’s helpful to keep the guidelines for trivial benefits in mind. Trivial benefits allow businesses to offer tax-free perks to directors and employees, provided certain rules are followed. These perks are also eligible for corporation tax deductions, making them a budget-friendly way to show appreciation.
How Trivial Benefits Work:
- Value Cap: The total cost of each benefit, including any delivery fees and VAT, must not exceed £50. Even a small overage will make the entire benefit taxable, so be sure to stay within this limit.
- Restrictions on Cash and Cash-Equivalent Vouchers: Trivial benefits cannot be given as cash or cash-equivalent vouchers. However, gift vouchers that are not redeemable for cash are allowed.
- Separate from Employment Contracts or Rewards: Trivial benefits must not be tied to an employee’s contractual obligations or provided as performance rewards. They are designed as small perks rather than compensation or bonuses.
- Director’s Annual Limit: Directors are entitled to a maximum of £300 in trivial benefits each tax year, which can be spread across six £50 benefits.
By following these simple guidelines, businesses can give thoughtful, tax-efficient gifts to their staff over the festive season.
