Trivial Benefits

December 1, 2022 12:40 pm Published by

Are you aware of Trivial Benefits, and the tax implications of holding company social events and parties?

What are Trivial Benefits?

A trivial benefit is a token or gift, given by management to their employees. These are usually, bottles of wine, chocolates, hampers, staff lunches etc.

These are gifts that employees can receive gifts from their employer without having to pay any tax on them.

When you don’t have to pay

You don’t have to pay tax on a benefit for your employee when all of the following apply:

  • it cost you £50 or less to provide
  • it isn’t cash or a cash voucher
  • it isn’t a reward for their work or performance
  • it isn’t in the terms of their contract

When you do have to pay

  • Is the cost of the benefit greater than £50?
  • Is the benefit cash or a cash voucher?
  • Is the employee entitled to the benefit as part of a contractual obligation?
  • Is the benefit provided as a reward or recognition for achievement?

If the benefit is one of the above, the cost will not qualify as a trivial benefit, meaning it will be taxed.

As a result, you must pay tax and National Insurance contributions on that expense and may also need to report it to HMRC.

Christmas Parties and company events

There can be tax implications on company Christmas parties and company events, are you aware of them?

The current rules for company events are:

  • be open to all your employees
  • take place annually, such as a Christmas party or summer barbecue
  • cost £150 or less per person

You may also hold multiple annual events if the cost of the events per head are no more than £150.

This also applies to online or virtual parties.

How Spectrum can help

If you’re thinking about booking a Christmas party and/or giving your hardworking staff gifts this festive season, don’t forget about the tax implications.

If you’re still unsure about anything relating Trivial Benefits or tax implications of Christmas parties please don’t hesitate to contact us.

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This post was written by Daisy Vowles

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