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Remember to use the trivial benefits exemption for your employee Christmas gifts - it's tax free!

Trivial Benefit rules to allow employers to provide their directors and employees with certain tax free “trivial” benefits means that Christmas is that much sweeter with tax free gifts for employees! So, don’t forget to check your own nice list (twice!) and this festive season bring a little extra joy to your hardworking team. There are certain conditions that need to be met in order to qualify for this HMRC exemption, so we have compiled a helpful list of our own to get you prepared before Santa Claus comes to town!

The rules were brought in as a simplification measure so that certain benefits needn’t be reported to HMRC or put on the P11D, and without any tax or national insurance for the employer or employee, however it is important to observe the rules around the benefit as detailed in our blog below by Tax Manager, Nickie Antley-Slater.

 

Maximum spend per benefit

In order for this to work, the maximum cost of providing the benefit is £50, this could be anything relevant from a chocolate box, to a novelty hamper or a work outing with maximum £50 per head. It is important to remember that the benefit cannot be cash or a cash voucher for a store.

Where the employer is a “close” company and the benefit is provided to an individual who is a director or other office holder of the company, the total value of trivial benefits is capped at £300 in the tax year.

You will need to ensure that you keep suitable records of all the trivial benefits provided.

 

Personalisation is key but not as a reward for services

The gift must not be a reward for services. If the trivial benefit is in recognition of service for example reaching a certain business goal or personal target, it will be taxable regardless of the value of the gift.

The gift is also not to be given as part of any contractual obligation, such as a salary sacrifice scheme, otherwise it will not be eligible as a trivial benefit.

 

Trivial benefit rules not restricted to Christmas – the exemption is applicable throughout the year, so you can share the joy all year round!

 

Contact our helpful elves at LWA!

If you are considering providing gifts for your employees this year and would like advice, or would like more information on the trivial benefit exemption please get in touch with our friendly elves (aka corporate and personal tax team) at our LWA Grottos. Contact our Tax Manager, Nickie Antley-Slater via mail@lwaltd.com, or you can call one of the team in Manchester on 0161 905 1801 or in Warrington on 01925 830 830.