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Author: JP / / Latest News

Small Gifts/Benefits Provided to Employees

For many years HMRC have been prepared to accept “trivial” benefits were not taxable.

However, what is “trivial” is up for debate – a box of chocolates on an employee’s birthday, probably yes. A bottle of wine at Christmas, again probably OK. But what about a case of wine?

It should also have been agreed with HMRC before being provided.

From 6 April 2015, Trivial Benefits are to be made statutory.

Each gift/benefit must not be more than £50 but there is no restriction on the number of such benefits per employee. Though if these were very regular we suspect HMRC would question if the conditions for non-taxability were being met.

These conditions are:

1. It is not cash nor a cash voucher.

2. It is not provided under salary sacrifice arrangements, nor any contractual obligation.

3. It is not provided in recognition of particular services performed by the employee (or in anticipation of specific services) Eg. The employee who locks up every night and is given a bunch of flowers once a month. This would not be eligible for exemption.

With regard to the £50 limit. If a benefit is provided to more than one employee and its nature means the actual cost for each individual is not readily available then so long as the average cost per person is less than £50, it is not taxable. Eg. a day at the races for 10 employees. Tickets £15 each, transport £100, food and drinks £200. Total cost £450. Average cost £45, therefore not taxable.

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