Are there any non taxable benefits I can give to my employees?
Yes, under the trivial benefits rules, where an employer provides a benefit to its employees, the benefit is exempt from tax as employment income if all the following conditions are satisfied:
- the cost of providing the benefit does not exceed £50 (or the average cost per employee if a benefit is provided to a group of employees and it is impracticable to work out the exact cost per person)
- the benefit is not cash or a cash voucher
- the employee is not entitled to the benefit as part of any contractual obligation (including under salary sacrifice arrangements)
- the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services). This means that the benefit must not be a reward for say a particular piece of work,or to celebrate a sales milestone being reached, but should be a birthday gift, or in recognition of a family event or to mark a particular time of year such as Christmas
For company directors the exemption is capped at a total cost of £300 in the tax year, but for employees who are not office holders in the company this does not apply.
If any of these conditions are not satisfied then the benefit is taxed in the normal way through the payroll, subject to any other exemptions or allowable deductions.
Points to note
One of the conditions that has to be satisfied is that the cost of providing the benefit does not exceed £50. If the cost of providing the benefit exceeds £50, the full amount is taxable, not just the excess over £50.
In determining the cost of the benefit for the purposes of the exemption, as for benefits in kind more generally, use the VAT inclusive amount
The cost of providing the benefit to each employee and not the overall cost to the employer determines whether the benefit can be treated as a trivial benefit. So, a benefit costing up to £50 per employee whether provided to 1 or more employees can be treated as trivial.
The benefit cannot be cash or a cash voucher. However, benefits provided in the form of a non-cash gift voucher can be covered by the exemption.
If you need help with this, or with other advice, then please get in touch with our accounting team.