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Changes to trivial benefits rules

Dec 28, 2016

Changes to trivial benefits rules - Latest Advice from Wagner Mason

Rules around trivial benefits changed in April 2016 so that employers can now provide trivial benefits without any P11D or employer/employee National Insurance impact (and also get corporation tax relief).

Trivial benefits include flowers, chocolates, meal out etc.

MUST meet 3 conditions for it to count:

  1. benefit must cost no more than £50
  2. NOT be a reward for services or be contractual
  3. NOT be cash or a cash voucher
There's no limit on trivial benefits an employer can provide to an employee (though realistically if was overused would probably be captured under reward for service).

HMRC have put a limit of £300 of exempt trivial benefits for Directors of close company.

Example of how this might work for Director of owner managed business

Director uses company credit card to buy 6 gift cards each with £50 credit on them. These gift cards can't be exchanged for cash. Then occasionally give yourself the vouchers to use. If there is more than 1 Director this can be done for each Director.

If the Director was a higher rate tax payer then if he/she took £300 extra in salary they would pay £126 in PAYE/NIC and the company would pay £41 in Ers NIC so £167 saving by using gift cards.