Are ‘trivial’ benefits from employers exempt from tax and NIC?
Friday, 24 May 2019
In the lead-up to the 2018/19 P11D filing deadline of 6 July 2019, I thought it would be helpful to employers if I recap the exemption available for trivial benefits and what the criteria are.
Where a benefit provided by an employer is ‘trivial’, it does not need to be reported on form P11D and therefore is not subject to income tax or class 1A NIC.
However, there are strict criteria that need to be met for a benefit to be classed as trivial:
- The cost to you, as the employer, is £50 or less, including VAT
- The benefit is not cash or a cash voucher. (This is different to a gift voucher. A cash voucher can be exchanged for its face value for cash and a gift voucher cannot.)
- An employer cannot provide the benefit as a reward for particular services performed by the employee
- An employer cannot provide it as a result of a contractual obligation
There is also an additional annual financial cap for directors and their family members.
Because of these criteria, the trivial benefits exemption will generally apply to gifts from an employer made in respect of a staff member’s welfare, wedding, birthday etc.
It’s essential that employers maintain detailed records of staff entertaining and gifts, including dates, employee names and amounts paid. This is important in order to accurately calculate the value of the benefits provided by the employer, especially if you want to rely on an exemption with a monetary limit.
Remember, if an employer gives an employee cash or a cash voucher, it will be considered salary and must be reported through the payroll.
If the benefits you provided do not meet the trivial benefits criteria, there are potentially other exemptions available for employers, so please get in touch to discuss these or any other queries you may have.
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