Trivial Benefits

If you’re a limited company director, you may find there are times when you want to give a gift from your business to your employees (if you have any), or even to yourself. Based on the gift’s circumstances you may find that the cost isn’t classed as a taxable benefit. 

In this blog we take a closer look at Trivial Benefits to understand how they work, what you’re able to purchase, and how it works from a taxation point of view. 

What are Trivial Benefits? 

In a nutshell, a Trivial Benefit is a gift that is exempt from tax and National Insurance Contributions, which an employer of a close company can occasionally give to directors or employees.  

What is a Close Company? 

A Close Company is a UK Limited Company with 5 or fewer shareholders, or by any number of shareholders who are also directors.  

A Trivial Benefit must: 

• Be £50 or less per person. Please note, if you are a director of a limited company, you’re capped at £300 per tax year. This means you could take a maximum of 6 trivial benefits worth £50 each in one tax year

• Not be in the form of cash or a cash voucher 

• Not be an ongoing cost, such as a gym membership 

• Not be given to an employee who would otherwise receive the benefit as part of their contractual obligation 

• Not be given as a reward or recognition for their professional achievement 

So long as the above criteria are adhered to, then the benefits will not be subject to tax and therefore you will not need to declare them on a P11D form. 

Tax Relief on Trivial Benefits 

If the benefit you wish to give adheres to the above points then you will qualify for corporation tax relief on the business expense and will not be subject to personal tax. 

The same rule applies for VAT and therefore you will also be able to reclaim VAT on the expense if classed as a trivial benefit (provided you are not using the flat rate scheme for VAT). 

Examples of Trivial Benefits 

The following examples of Trivial Benefits are typically what you’re able to give: 

• A birthday gift for an employee, such as a bottle of wine or box of chocolates 

• A work anniversary gift, such as a restaurant voucher. Remember that the voucher cannot be a contractual perk 

• A Christmas gift, such as a hamper  

• A summer BBQ 

• A new baby or wedding gift  

So long as each benefit costs £50 or less and is non-contractual, it’s classed as a Trivial Benefit.  

The following examples are not classed as Trivial Benefits: 

• Cash or cash equivalents (such as a £50 note) 

• Gift cards which you’re able to exchange for cash 

• Any benefit that costs more than £50 (even by 1p!) 

• Regular or contractual perks (such as a weekly takeaway) 

• Childcare costs 

• Any bonuses given 

• Company cars 

• Health insurance, travel and entertainment expenses 

Trivial Benefits – final thoughts from SG 

Trivial Benefits are a simple, tax-efficient way to reward your team — but only if used correctly. If you’re unsure about what qualifies or how to apply the rules for directors or employees, we’re here to help. 

Your SG Accounting Client Director specialises in helping businesses stay compliant while making the most of available allowances and incentives. 

Get in touch today for personalised advice or to chat about how we can support your employee benefits strategy.