There will be occasions when a company may wish to provide small gifts to employees or directors. In this guide, we will explain what can be claimed and how much.
What are the changes?
Since 6 April 2016 the rules have changed, meaning that employers can now provide trivial benefits such as small gifts and entertainment without having to include these within PAYE settlement agreements or disclose on P11D forms. Previously, trivial benefits would cover the provision of tea and coffee whilst at work and small seasonal gifts, such as a turkey for Christmas.
The new rules allow some more flexibility however there are some small changes you should be aware of, to make sure you don’t get stung!
The following conditions must be adhered to in order to be able to provide tax-free trivial benefits.
The benefit must not:
- Exceed £50 (this applies to each time an employer provides a trivial benefit)
- Be a cash payment (gift vouchers are allowed, providing they can’t be exchanged for cash)
- Be part of any contractual obligation
- Pay for services that are performed as part of regular employment duties
Be careful – not to spend one penny more than £50, otherwise the full value of the benefit will be taxable. This is also not a round sum allowance.
The business does actually need to incur a cost and claim the receipted amount, so it can’t just claim the full £300 at the end of the year.
Trivial benefits for directors
Directors may also be able to receive trivial benefits, as well as providing these to family members. Please bear in mind of the above conditions, as these will all still apply. As a director, there is an annual cap of £300. If a company does provide trivial benefits to other family members who are not employees or directors, these will be included as part of the directors allowance for the year.
Examples of what you can do to treat your employees?
Providing it’s not cash, the gift itself could be anything, providing the cost is below £50 per head.
For example; store gift cards, flowers, chocolates, wine, hampers or even taking staff out for a meal.
These trivial benefits are in addition to the annual staff entertaining allowances of up to £150 per annum, per attendee and therefore will help increase morale, whilst reducing your corporation tax liability.
How Aardvark Accounting can help you?
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