Trivial Benefits - what are they and what are the rules?

A trivial benefit is essentially a non-taxable gift from an employer to its employee. Whilst the rules applying to employees and directors are slightly different, both directors and employees can receive trivial benefits without paying any tax or National Insurance.

However, HMRC have set out strict rules that a trivial benefit must meet when it comes to the directors of a business.

As a director you can’t receive trivial benefits worth more than £300 in a tax year (this allowance is available for every Director at the company). Each trivial benefit you receive must meet the following criteria:

  • The benefit cost must be £50, or less
  • It cannot be in the form of cash, or a cash voucher
  • It cannot be a reward for work performance
  • It cannot be included in the terms of the employee contract

Following these rules, you as a director can gain a tax break on £300 worth of gifts every tax year. Whether your company pays for 10 bottles of gin at £30 each, or six store vouchers at £50 each, these can be received by you as a trivial benefit.

There is no need to advise HMRC of the trivial benefits you have received throughout the year, and they don’t need to be reported on your annual P11 or P11D forms.

In conclusion, trivial benefits are a simple tax effective way to gain up to £300 exempt income per year. Just make sure you follow the limitations and rules stated and make the most of your yearly allowance.