Trivial benefits

Figuring out if you need to file a P11D or how to avoid needing one can be a fairly difficult task for small businesses but last year HMRC brought in some new legislation regarding ‘trivial’ benefits in kind that makes the decision a little easier. This change in legislation basically means that employees and directors can receive certain benefits from the company without the need to complete a P11D form every year.

To qualify as a trivial benefit:

  • The total value of the benefit must not exceed £50;
  • It must not be cash or a cash voucher (although gift vouchers are covered by the legislation);
  • There cannot be any entitlement or contractual clause related to the benefit;
  • There cannot be more than £300 in total benefits over the year for a director or a family member of a director;
  • It must be a freely given gift related to employee goodwill or welfare;
  • It must not be related to work performance.

Based on these rules, buying flowers for an employee that is off sick or taking employees out for dinner to celebrate a birthday could come under this category but a small gift for hitting a work target or a working lunch would not be permitted.

What does this mean for you?
If you do consider taking advantage of this legislation please be aware that this removes the tax obligation from the individual receiving the gift only and has no implications on corporation tax.

If you wish for further clarification on this legislation or advice on how you could apply it to your business, then please don’t hesitate to contact us.