What’s a trivial benefit worth to employers?
Posted on: 16-05-2025
What’s a trivial benefit worth to employers?
The tax and NI exemption for trivial benefits is much misunderstood, but nonetheless very useful to employers. When can you use it, what are its advantages and are there any pitfalls to watch out for?
What’s a trivial benefit?
As the name implies, a trivial benefit in kind is something that costs employers little which they provide to their employees as a perk of their job. It’s the cost to the employer that is the first hurdle that must be cleared (or rather ducked under) for a benefit to count as trivial. The worth of a benefit to the employee is irrelevant.
Trivial amount
A perk counts as trivial, and so is exempt from income tax and NI, if it costs an employer no more than £50 and meets other conditions.
The cost to be taken into account includes not only the price of the item or service but all related costs. For example, if you send flowers to an employee who’s just had a baby and they cost £50 plus a delivery charge of £7.50, the exemption would not apply as the total cost exceeds £50.
If a gift is shared by a number of employees and it’s not possible to work out the exact cost for each, you can use the average to determine if the exemption applies. For example, if as an off-the-cuff goodwill gesture you pay for ten of your employees to eat out at a local restaurant at a total cost of £420, you don’t have to check the bill to see who ordered the burger and who ate the lobster thermidor. The average cost per employee is £42 and as that’s within the £50 limit the exemption applies to the whole cost of the meal.
The exemption can apply to benefits provided to directors but there’s an overall cap for them of £300 per tax year, e.g six gifts of up to £50 each for each director.
Other conditions
A perk is not trivial even when it costs less than £50 if it’s any of the following:
- part of a salary sacrifice (optional remuneration) arrangement
- paid in cash or a voucher that can be converted to cash
- part of the employee’s contractual earnings; or
- recognition for “particular services performed by the employee as part of their employment duties”. For example, you buy an employee a bottle of Champagne for landing a new customer.
Not so trivial advantages
The trivial benefits exemption exists not to allow employers to reward their workers tax and NI free, although that’s a side effect, but to reduce the paperwork and admin for employers and HMRC. Imagine if you bought each of your staff ice creams on several occasions over the course of a summer. For each employee the cost might be £3 per time. Without the exemption a P11D (benefits and expenses return form) would need to be prepared for each employee at the end of the tax year. That’s a stack of work for literally very little benefit. What’s more, assuming an employee doesn’t owe tax apart from that on the low value perks, HMRC won’t usually bother issuing a tax bill as the cost of administration is likely to outweigh the tax it would collect. In a tax world that’s increasingly confusing the trivial benefits exemption makes perfect sense.
If you would like any assistance with any of these points.