Did you know that if you reward staff with Benefits in Kind, you can save tax on these by meeting certain conditions? A benefit in kind can be classed as a Trivial Benefit and therefore exempt from tax if:
- the cost of providing the benefit does not exceed £50
- 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.
The exemption has a further cap of a total cost of £300 in the tax year if:
- 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, or a member of their family or household.
This means that as an employer you can buy gifts, pay for meals, or give shopping vouchers to your employees (and yourself) as a Trivial Benefit providing that you meet the criteria above.
For example, a bouquet of flowers delivered to an employee who has just had a baby would be classed as a trivial benefit, and therefore tax exempt, if they cost no more than £50. If the flowers cost £51 or more, they will no longer class as a trivial benefit, and the entire amount (not just the excess) will be subject to tax.
As another example, if you wanted to take your staff out for a meal to celebrate your birthday, as long as the total cost of the bill works out at no more than £50 per head, this would class as a Trivial Benefit and be tax exempt.
Although you cannot give cash, or a cash voucher, gift vouchers are acceptable, providing again that they cost no more than £50. This means that it is fine for you to reward staff with gift cards for high street or online shops, and class these as a Trivial Benefit, exempt from tax.
To find out more about making the most of Trivial Benefits, speak to one of our advisors today.