Trivial Benefits

You may never have heard of them but the new ‘Trivial Benefits’ rules came into affect from the tax year 2016-17 and onwards. They mean that no income tax charge arises on a benefit provided to an employee or a member of an employee’s family if four conditions are met:

• The benefit is not cash or a cash voucher
• The cost of providing the benefit does not exceed £50
• The benefit is not provided as a result of a salary sacrifice arrangement
• The benefit is not provided in recognition of services provided by the employee or in anticipation of such services.

Additionally, for directors and their families there is a £300 annual limit on trivial benefits. It’s not quite so simple as meaning that that non-directors will be able to enjoy  a series of tax-free small benefits totaling £300 in a tax year as the fourth condition above can cause problems. Where trivial benefits are enjoyed regularly, HMRC have sometimes taken the view that employees develop an expectation of receiving such rewards so they become, in effect, contractual  and are therefore taxable. So you need to be careful not to create a clear pattern of payments. Random (if minor) generosity is the order of the day!