Trivial Benefits

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Trivial Benefits

Employees react well to little rewards from their employer, especially if the treat is unexpected and seen as a genuine “thank you”.

These occasional trivial benefits can be provided tax free if all four of the following conditions are met:
• the reward is neither cash nor a voucher that can be exchanged for cash;
• the cost of providing the reward does not exceed £50 per employee;
• the employee is not entitled to receive it through any contractual obligation; and
• it is not provided in recognition of services performed by the employee as part of their employment duties.

If, for example, the employer promises to provide bacon rolls to employees who attend an early training session every Friday, that would amount to a reward for performing duties connected with their employment.

If an employer decides to buy each member of staff an ice-cream on a hot day, that cool treat is not a reward for services as the employees are not required to do anything in order to receive it. The surprise ice-cream is thus a tax-free trivial benefit while the regular weekly bacon roll is potentially taxable. If all staff are provided with a free or subsidised breakfast at the workplace that could be tax-free under the rules applying to a staff canteen.

There is no limit on the number of trivial benefits which can be provided to an employee in a single tax year as long as each item provided meets all of the conditions above. However each gift must be distinct and not part of another promise or item. If the employer gives each employee a gift card which is topped up at the employer’s discretion, that gift card including all the top-ups counts as one gift.

Where trivial benefits are provided to a director of a close company or to a member of their family or household there is an annual cap of £300 on the value of items which can be treated as trivial benefits.