By PaperRocket Accounting, Dec 11 2019 09:57AM
It’s December, and whether we like it or not, that means that Christmas is nearly upon us! And if you’re in the ‘already done all my Christmas shopping’ camp, or even if you’re leaving it until 5pm on Christmas Eve, have you thought about rewarding your employees for their hard work in 2019? In this blog, we take a look at a lesser known way of doing just that, by giving the gift of a ‘trivial benefit’.
With a normal benefit in kind, as well as the company having to pay additional employers NI, your employee will be hit with additional tax and NI on the value of the benefit. Which means that even if you are giving a gift with the best of intentions, your employee may end up out of pocket because of it. Luckily, the great thing about trivial benefits is that, provided the below criteria is met, there will be no tax or NI implications for your hard working employee. And, as an added bonus, your company will receive corporation tax relief on the expense!
There are of course criteria that must be met to be able to claim a ‘trivial benefit’. These are that the benefit must not:
• Exceed £50 (not even by 1p or the whole amount becomes taxable). If, for example, you take a number of staff out for a meal, this can be averaged out per head.
• Be cash (although gift vouchers are allowable, provided they can’t be exchanged for cash).
• Be a reward of normal employment duties.
• Be part of any contractual obligation/salary sacrifice scheme.
As with any business expense, you will also need to ensure that you retain the receipt(s) for the expense, and keep a note of what it was in respect of, to prove it did not breach any of the above. Provided that all of this criteria is met, the recipient will not have to pay any tax or national insurance on the benefit, and the company will receive corporation tax relief on the amount.
And some more good news…
You can also treat yourself as this also applies to company directors! The only difference being that whilst for staff, there is no cap to the amount of trivial benefits that can be provided, for directors, there is an annual £300 cap. Again, each benefit must not exceed £50, and receipts must be retained.
So why not go ahead and share the gift of giving with your employees this Christmas?
PaperRocket Accounting provide accounting and tax services to professional contractors and freelancers working in the UK.
We offer our clients a flexible choice of fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.
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We pride ourselves on our client satisfaction and customer service and were awarded 'Welwyn Hatfield Business of the Year 2019' in the SME Hertfordshire awards. We were also runners up and 'Highly Commended' for 'Best Contractor Accountant 2019' in The Contracting Awards, 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.
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