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

Introduced in April 2016, 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!) this December and bring a little extra joy to your hardworking office. 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 – Santa Claus is coming 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 follows:

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.

If you are considering providing gifts for your employees this year or would like more information on this trivial benefit exemption please get in touch with our friendly elves at our LWA Christmas Grottos on 0161 905 1801 for Manchester and on 01925 830 830 for Warrington. It’s also not restricted to Christmas – the trivial benefits exemption is applicable throughout the year, so you can share the joy all year round!