Trivial Pursuit is a board game from Canada in which winning is determined by a player’s ability to answer general knowledge and popular culture question. However, if you employ some expert knowledge then both businesses and employees can benefit from Trivial Benefit and not by just getting a full cheese wedge.
Trivial Benefits: What are they and what are the rules?
Legislation has been introduced from HMRC that allows employers to make benefits in kind to it’s staff.
Sounds good, right? But people often say that that is something sounds too good to be true, then it must be.
But that’s not the case with Trivial Benefits, there are genuine advantages to Trivial Benefits In Kind to both the owner of the Limited Company and the staff it employs.
Aren’t Benefits In kind Taxed?
I remember years ago that my grandad used to get a turkey at Christmas every year, a benefit in kind. However, this came to a halt because it would be classed as a benefit in kind and at that point in time would have had to be declare on a P11D and subject to tax and national insurance.
The Finance Bill 2016 changed the treatment of some Benefits I Kind, so from 6th April 2016 some benefits would be referred to as Trivial Benefits and would not need to be declared on a P11D and therefore NOT subject to tax/national insurance.
What Is Classed As A Trivial Benefit?
The criteria for Trivial Benefits is refreshing simple. You don’t have to tax on a benefit if it satisfies the following criteria:
- it cost you £50 or less to provide
- it isn’t cash or a cash voucher (Gift cards are okay as long
- it isn’t a reward for their work or performance
- it isn’t in the terms of their contract
Examples of things that could be given as a Trivial Benefit are flowers, meals and gift vouchers. However gift vouchers are only allowed providing they can’t be exchanged for cash.
You must be careful not to exceed the £50 limit, if the benefit costs £50.01 then it must be declared on a P11D and taxed.
Who Can Benefit?
Employees can obviously benefit from this, as long as the Trivial Benefit does not exceed £50 and adheres to the other criteria
Directors can also take advantage of the Trivial Benefit as long it adheres to the criteria and in addition, if the business is a Close Company, the total benefits received cannot exceed £300 per year.
The business can gain because the Trivial Benefits are an allowable business expense and therefore the use of these benefits can help reduce Corporation Tax.
What Is A Close Company?
A Close Company is a Limited Company that has 5 or less shareholders
Example Of What Is A Trivial Benefit
At Christmas a business provides it’s employees with a turkey. The company employs 25 staff and the cost of the turkey varies due to weight. It is not possible to attach an individual cost to each turkey, the individual benefit is therefore an average cost. The total cost of the turkeys is £1,117, the individual Trivial Benefit is £47.
Example Of What Is Not A Trivial Benefit?
In October a company takes it’s staff out to celebrate a long serving member of staffs birthday. The business employs 30 staff and the cost of the meal totals £1,560, the employees are free to choose whatever food they wish from the menu so it is not reasonable to attach an individual benefit value. In this case the average cost of the benefit is £52 and not allowable as a Trivial Benefit.
At Christmas a business buy it’s 20 staff and 2 directors a bottle of wine, the cost of the wine for it’s staff is £15 per bottle and the cost of the wine for the directors is £140. The total cost of wine is £580 and a simple average would be £26, however in this case it would be considered reasonable to attach the actual value of the benefit and not an average. So the £15 wine per employee is allowed as a Trivial Benefit but the £140 wine for the directors is not allowed.
Founder of Honey Bee Accountancy