It is now possible for Employers to provide small benefits up of to £50 to their employees free from income tax and NIC, provided the gift qualifies under the following conditions:
- the cost of providing the benefit does not exceed £50 (or the average cost per employee if a benefit is provided to a group of employees and it is impracticable to work out the exact cost per person,
- the benefit is not cash or a cash voucher,
- the employee is not entitled to the benefit as part of any contractual obligation (including under salary sacrifice arrangements),
- the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services).
An employer can provide an employee with any number of qualifying Trivial Benefits in a year but there is a cap of £300 per annum imposed for close company directors.
Each director has their own £300 annual cap. However, Trivial Benefits made to members of their family or household will need to be counted within the director’s £300 annual cap, unless the member of the family or household works for the company in their own right. In such cases the family or household member will have their own £300 annual cap, even if they are not themselves a director.
If for example, mother and father are both directors and daughter does not work for the company but receives a £50 bunch of flowers on her birthday, this benefit will need to be equally apportioned to her parents so that £25 comes off each parent’s £300 annual cap.
HMRC has published draft guidance on this and other aspects of the Trivial Benefits legislation which can be found here.