If you wish to spread the festive cheer and give your employees a gift this Christmas, it is possible to do so, through a statutory exemption know as a ‘trivial benefit’.
A ‘trivial benefit’ allows an employer to give their employees a gift without incurring any tax charges upon either the employer or the employee.
Are you feeling more inclined to play the role of the office version of Santa this year? As long as the below criteria is met, the gift will be classed as a trivial benefit:
- The cost of providing the gift must be £50 or less.
- It cannot be cash or a cash voucher (non-cash gift vouchers are allowed).
- It cannot be a reward for the employees work or performance.
- The gift must not be in the terms of the employees’ contract or as part of a salary sacrifice arrangement.
Even Santa keeps his receipts
All trivial benefits given to employees must be recorded by the employer to show that statutory limitations have not been exceeded.
If the cost of providing any gift surpasses £50, it will be subject to tax implications for both the employer and the employee. This means that if the benefit exceeds £50, the full amount is taxable, not just the excess over £50.
There is no limit on the number of trivial benefits an employee can receive, except where the benefit is provided to a director or office holder of a limited company run by five shareholders or fewer. If you fall into this category, you will not be able to receive trivial benefits that exceed £300 annually. This limit extends to those connected with a director, for example spouses and children.
For more information please contact Max Whiteley on 0161 236 6936 or via email on email@example.com.