In the lead-up to the festive period, what greater way to show your appreciation for your employees than by gifting them. Noncash gifts, also known as Trivial Benefits, can be given without triggering tax or National Insurance liabilities, so long as they meet HMRC’s rules. These gifts can be anything, from birthday gifts to festive treats, so long as you understand and stick to HMRC’s rules you’re able to show your gratitude.  

In the blog we explore what counts as a Trivial Benefit, how much you’re allowed to spend, the rules surrounding gifting directors, salary sacrifice restrictions, and some examples of allowable gifts. 

• Trivial Benefits are small, non-cash perks that are worth a maximum of £50. 

• They cannot be associated with an employee’s performance or contractual obligation. 

• Directors have a £300 annual cap on Trivial Benefits. 

• Salary Sacrifice arrangements will nullify Trivial Benefit exemptions. 

In a nutshell, a Trivial Benefit is a minor, low-value gift that can be given to employees without having to be reported to HMRC or need tax or NICs being paid, so long as it meets the following conditions: 

• It must cost £50 or less (this includes VAT). 

• Is not cash or a cash voucher. 

• Is not a reward for professional performance. 

• Is not included in an employee’s contract. 

Important – If any of these conditions are broken, then the full amount of the benefit is taxable, and not just the excess. 

HMRC isn’t always doom and gloom! The exemption is there to all employers the opportunity to reward their staff without any administrative burden. It’s perfect for low-value, genuine gifts, such as: 

• Birthday gifts. 

• Seasonal treats, such as Christmas gifts. 

• Small tokens of recognition. 

The overall goal of a Trivial Benefit is to foster morale, and not to create a taxable reward that’s disguised as a gift. 

The Limitations 

Employees – There is no limit to the number of qualifying Trivial Benefits you’re able to give to your employees per year. 

Directors of close companies – There is an annual cap of £300, and any amount above this threshold is taxable. 

Vantage’s top tip – Keep a record of gifts to directors to ensure you remain below the threshold. 

• Any benefits under a salary sacrifice arrangement are not trivial, even if their value is less than £50. 

• Tax and NICs must be paid on the higher of the salary given up, or the benefit’s value. 

• These must be reported on P11D forms. 

The following examples are common Trivial Benefits: 

• A bottle of wine or fizz to celebrate a birthday.  

• Chocolates at Christmas. 

• Flowers to mark and celebrate an employee’s work anniversary. 

• Seasonal flu jab (these are not classed as a medical treatment). 

• Office refreshments, including tea, coffee, snacks, etc. 

• Store-specific gift cards may qualify if under £50.  

• Cash-equivalent cards, such as Visa, Mastercard, etc are always taxable. 

• HMRC will allow the averaging costs per head for team meals or group gifts. 

• Should the average cost per person be £50 or less and the conditions surrounding Trivial Benefits are met, then the benefit is still classed as trivial. 

• Always ensure you maintain records of your calculations for compliance with HMRC. 

Remember that if at any point you’re unsure whether your gift will meet the conditions set out for Trivial Benefits, simply get in touch with your Client Director who will be able to answer your questions. 

Whilst Trivial Benefits may seem straightforward, they can also be really easy to get wrong. If you answer “yes” to any of the following questions, your benefit will not be allowable: 

• Did your gift exceed the £50 limit? 

• Was the gift tied to an employee’s performance? 

• Did you gift cash or a cash-equivalent voucher? 

• Did you fail to keep adequate records, most importantly for directors and group events? 

Any gifts which don’t comply with HMRC’s conditions, must be reported to HMRC by: 

• Completing a P11D form for those affected employees. 

• Completing a P11D(b) form for Class 1A NICs. 

• Alternatively, you can process it via payroll if you’re registered for payrolling benefits. 

Trivial Benefits are a fantastic way to show your employees your gratitude for their hard work without the tax complexities, especially around the festive season. Remember though that compliance is essential, and without it it’ll end up costing you more than your gesture of goodwill. 

Your Client Director here at Vantage Accounting can help review your Trivial Benefit plans to ensure you’re compliant with HMRC, give you advice on the types of allowable gifts and incentives, and show you how to complete a P11D if needed. 

Trivial Benefits really are a fantastic way of giving back to your team, and with the correct rule-following you’re able to do so in a compliant way. By ensuring you understand the rules, keep the associated records, and consult with your Client Director when needed, your gifts will remain tax-free. Get in touch with the Vantage team today for more advice and support.