As the holidays draw near, many employers like to show appreciation with small seasonal gifts.
While these gestures are well-intentioned, even modest perks can create tax and National Insurance considerations if they are not handled correctly.
To help you keep the celebrations enjoyable and compliant, it is worth revisiting the rules around trivial benefits.
What counts as a trivial benefit?
A trivial benefit is a low-value, non-cash gift provided to an employee. HMRC sets strict conditions that must all be met for the benefit to qualify for exemption.
A gift will only be considered trivial if it:
Typical examples include a Christmas hamper, a bottle of wine, flowers, a box of chocolates or occasional event tickets.
Company directors can receive trivial benefits too, although they are limited to a total of £300 per tax year.
What are the tax implications?
When all the HMRC conditions are met, trivial benefits are one of the most tax-efficient ways to treat staff. They:
However, any gift that fails to meet the criteria will be treated like any other benefit in kind. In that situation, it must be reported to HMRC and the relevant tax and NICs will apply.
Where employers payroll their benefits, they will not need to complete P11Ds for affected employees, but they must still file a P11D(b) to settle any Class 1A NICs.
Keeping clear internal records of all trivial benefits is advisable so that thresholds are not breached accidentally and compliance is maintained.
Keeping gifting tax-efficient
Thoughtful gifts are a welcome addition to the festive period, but it is essential to ensure that these gestures do not unintentionally create a tax bill. With the right planning, you can reward your team while staying safely within the rules.
