WHAT IS A TRIVIAL BENEFIT?

Trivial benefits were introduced in April 2016 and are tax-free to the employee with the employer not needing to notify HMRC on a P11D. A trivial benefit is,

• The cost of providing a benefit so long as it is no more than £50 (if above £50 then the full amount is taxable, not just the excess above £50)
• The benefit is not cash or a cash voucher
• It isn’t in the terms of the contract to receive the benefit
• It is not a reward for their work or performance.

It is the cost per employee that is trivial whether the employer gives it to one or 300 employees and not the total cost of the benefit to the employer.  The £50 is also inclusive of VAT if the benefit given includes it, regardless of whether the employee recovers the VAT.

If the employer cannot work out the exact cost per employee when given to a large number of employees, then the average cost per employee must not exceed £50 for it to be classed as trivial.  The only stipulation is that the other conditions must apply.

The employer must use a common sense approach with HMRC giving examples.

If a group of 5 employees were out for a meal together and the total bill is £240 then HMRC will accept that this is an average of £48 per employee.

However, if say 25 employees are given bottles of wine for Christmas and the total bill comes to £1,000, with some costing £15 per bottle for employees and others £140 per bottle for the directors. In this situation it is practical to determine the cost of the individual benefit per employee and director.  The £15 bottle is trivial whereas the £140 bottle will need to be full declared.

If you would like any further assistance and guidance on this, please do not hesitate to contact us on 0113 286 4486.