What are Trivial Benefits?

Helping members of your team to feel valued and appreciated can play a large part in retaining them for the future of your business. Giving small, personal gifts can also just be a lovely thing to do, to recognise life events and small celebrations.

You need to be careful what you give as gifts though, to ensure you’re not causing unexpected tax issues as an unwelcome side effect!

What CAN you give to your team?

Cash or cash vouchers that you give to your team, whether at Christmas or any other time of the year, will always be taxable and must be shown in the payroll.

Small gifts though, known as Trivial Benefits, are not.

The distinction between what is taxable and what isn’t can be vague though, with the definition of ‘trivial’ being the key. The following are the key criteria which you must meet for your selection to be classed as a Trivial Benefit:

• Any gift you give must be considered as ‘trivial’ to the recipient rather than to you. HMRC give examples of items such as a turkey, or a bottle of ‘ordinary’ wine, or a box of chocolates.
• The value of the trivial benefit or gift must be less than £50, including VAT.
• Gift cards can be included as they are usually tied to one retailer, as long as the other criteria are met, and there is no cash alternative available.
• The trivial benefit or gift cannot form part of any contract of employment, or be in return for work completed.
• For Directors of closed companies, where there are five or less shareholders, the annual total of these gifts must be under £300.

If the gift cannot be classed as ‘trivial’ the value of it will again be taxable on the employee and should appear on a P11D or in a settlement agreement.

Do get in touch if you aren’t sure, as sadly there are no hard and fast rules from HMRC to help you decide! Follow this link to see the Trivial Benefits guidance from HMRC.