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In April 2016, HMRC introduced trivial benefits to allow businesses to gift staff small perks, such as birthday and Christmas presents, without paying tax or national insurance on them.
Up until that point you would have found yourself recording every gift you gave employees on your end of year record.
Of course, there are some limitations to non-taxable perks which are defined below.
The trivial benefit…
Must cost you £50 or less per employee
Cannot be cash - this includes a cash voucher
Is not given as a reward or incentive
Is not mentioned in an employee’s contract as a perk, i.e. it’s not a benefit-in-kind
Directors of ‘close’ companies do not exceed £300 per year
Many businesses give gift cards and gift vouchers to employees as a reward or incentive. What companies often don’t realise is that some of these gift cards could be recorded as a trivial benefit, which means you’d save your business money on tax and national insurance payments.
If you give gift cards to your employees for occasions such as birthdays and Christmas, then you can, and you should, be giving them as a trivial benefit – not a benefit-in-kind.
Don’t get caught out however with cash based gift cards, for example prepaid Mastercards. These will come under HMRC’s “it is not cash” exempt rule.
There are plenty of occasions where you can give your employees a gift card, up to the value of £50, and record it as a trivial benefit:
Anniversary gifts – not work anniversaries though as this is deemed as a reward
New baby gifts
New job and farewell gifts
Welcome gifts for new employees
Lunch, dinner or drinks with colleagues
Refreshments out of the office, such as coffees and teas
Purchasing new work attire ahead of new business pitches or events
Bank holiday treats
This is a really good question. You must be thinking by now you could save your business a lot of money here. And you’re right to think this, as yes, within reason you can!
There are no limits on how many trivial benefit gift cards your business can hand out, however you must stick to the rules. That means each gift card must not cost more than £50 per employee.
Theoretically, you could give each employee a £50 gift card every day of the working year. However, HMRC would no doubt view this activity as suspicious and it would be hard to justify the trivial benefit wasn’t part of a reward or benefit-in-kind.
Do watch out and make sure your trivial benefit gift card doesn’t go over £50 either – even if it’s by 1p. HMRC will make you pay tax and national insurance on the full amount, not just on the penny.
You can use giving gift cards or vouchers as a trivial benefit to your advantage. Adhoc gifts that go through payroll may end up getting mixed up in tax and national insurance. However, presenting these items as a gift card makes it a lot easier to identify the trivial benefits, against the non-trivial benefits. Plus, by recording these correctly, you could save your business up to £48.10 each time!
Here’s an example:
Gifts Paid Through Payroll vs Trivial Benefit Gift Card
Payroll Gift Card
Gift Value £50 £50
Tax £36.20 £0
National Insurance £11.90 £0
Total cost for your
business £98.10 £50
Saving/loss for your
business - £48.10 £0
Choice Gift Cards can be given to your employees as a trivial benefit as long as each gift card doesn’t exceed the £50 limit.
These particular gift cards are ideal for targeting specific audiences as they group well-known retailers together to make a thoughtful and more personal present.
What occasions could I give a Choice Gift Card as a trivial benefit?
Fashion Choice – give employees a Fashion Choice gift card to purchase new workwear attire ahead of a new business pitch or event
Spa Finder – these gift cards are ideal for employee wedding presents and could be given to a group of peers to throw a mini-hen do
Kids Choice – perfect for employees expecting a baby
Restaurant Choice – take employees out to lunch using our Restaurant Choice gift cards. As long as each gift card doesn’t exceed £50 you’ll be able to cover the full cost of the meal as a trivial benefit
One4all is our multi-retailer gift card that’s often given to employees as part of a reward and incentive programme. However, did you know you can also give a One4all gift card (up to the value of £50) as a trivial benefit too?
As One4all allows employees to shop with over 130 brands across retail, leisure, and entertainment sectors, the gift cards make great presents for many occasions.
What occasions could I give a One4all gift card as a trivial benefit?
Birthdays – employees will enjoy choosing where, when and how they spend their birthday gift
Christmas – One4all gift cards work well for large and diverse workforces at Christmas as there are so many brands for employees to choose from
Wedding and engagement presents – it’s hard to know whether newlyweds want something for their home, money towards a honeymoon, or a bottle of bubbly to celebrate. Give employees control over how they spend their gift and you can be confident they’ll be happy with the outcome
Select is a platform that allows businesses to reward employees instantly by emailing or texting a code that can be redeemed for a gift card.
Very few companies realise they can also use Select Codes to fulfil trivial benefits for their employees. As long as you issue a Select Code as a ‘gift’, not a ‘reward’ and the value doesn’t exceed £50, the mechanic can be an effective way to manage trivial benefits for a large workforce.
What occasions could I issue a Select Code as a trivial benefit?
Annual events such as Easter – issue a Select Code that allows employees to purchase chocolate gifts for themselves, family and friends ahead of Easter
Welcome gift for new employees – say “welcome” to new employees by sending them a Select Code to spend on themselves in the first month of their employment
Bank holiday boosters – send Select Codes to employees ahead of Bank Holidays to treat themselves to something they can enjoy over the long weekend
Voucherstore is an online platform that gives employees 24/7 access to discounted gift cards. Voucherstore is often rolled out as a benefit-in-kind for employees, however you can use the platform for trivial benefits.
Gift employees a trivial benefit using Voucherstore by giving them free reign to choose a gift card of their choice (up to the value of £50).
What occasions could I use Voucherstore to give a trivial benefit to an employee?
Birthdays – access to Voucherstore allows employees to choose their own gift
Weddings – let newlyweds choose how they spend their gift by choosing the right gift card for them
New home – every employee will have their own style when it comes to interiors. Congratulating employees on their new home with access to Voucherstore means they can buy something they really want for their new place
New baby – many employees won’t know if they’re expecting a boy or a girl, therefore the ability to choose what gift card they want will bring new-baby-shopping-pleasure to new parents
An easy way to purchase trivial benefit gifts in bulk is using Gift Card Store for Business. You simply log on, select the amount of gift cards you want, select the value (remember, only £50 per gift card) and then enter the recipient(s) and delivery details. It certainly makes being organised for occasions, such as employee birthdays, easier and more manageable for HR and finance departments!
Occasions you could bulk buy trivial benefit gift cards using Gift Card Store for Business:
Birthdays – bulk buying gift cards for employee birthdays makes it easy to produce gifts at the right moment
Christmas – be prepared for Christmas by bulk buying your festive employee gifts well in advance of the event
New staff welcome gifts – it pays to have a stash of “welcome” gift cards in the office as it means less admin when new employees arrive
Team lunches – if you know teams will lunch several times a year it’s worthwhile bulk buying Restaurant Choice or One4all Gift Cards. It makes trivial benefit admin a lot easier for planned and adhoc lunches
If you’re interested to find out more about how your business could save money using our gift cards and services for trivial benefits, contact us today.