Introduction

As we approach the end of the year, you are probably thinking about ways to thank your staff for their commitment over the year. Whether it’s a small gesture to say "thank you" or a festive treat, you might not realise that you can give your employees certain perks without them — or your business facing a tax bill. This is where trivial benefits come in. 

Trivial benefits are a tax-efficient way to boost staff morale with small gifts, without worrying about tax or National Insurance. But there are specific rules around what qualifies, so let’s take a look at how they work. 

What are Trivial Benefits?

Trivial benefits are exactly what they sound like—small, low-value gifts or perks. HMRC allows businesses to give employees perks worth £50 or less, and as long as the benefits meet the criteria, neither you nor your employees will have to pay tax or National Insurance on them. 

The key is that these perks must be: 

- Less than £50 in value (including VAT) 

- Not cash or a cash voucher (gift vouchers are acceptable, but no exchange for cash) 

- Not given as a reward for work or performance 

- Not included in the employee's contract or as part of their regular benefits 

 So, if you give your staff a box of chocolates or a gift card for their favourite coffee shop, and it meets the above criteria, you’re good to go! 

Examples of Trivial Benefits 

 Here are some examples of trivial benefits that could be a good idea for your team members, all within the £50 limit: 

 - A bottle of wine or a box of festive treats 

- A gift voucher 

- A bouquet of flowers to brighten their day 

- Tickets to a local event 

 These small gestures show appreciation without creating tax headaches. However, it’s important to note that the benefit cannot be part of a contractual obligation or linked to performance. 

Here’s the unexpected benefit

Many small businesses see the tax return as the ultimate goal, but at Len Valley Bookkeeping we know that the most important reason to get your tax return completed now rather than later is to know your numbers. It gives you time to save for your tax bill if you haven’t already (talk to me about this, I can help), and it is key to knowing your numbers. 

Your tax position reflects your business performance for a certain frame of time, and we expect you want to know how you’re performing in as near to real time as possible. Understanding your financial situation is vital in running a successful small business. By knowing your financial figures in-depth, you can make informed decisions for your business, plan for the future, and stay on top of your finances.

Watch the Limit! 

One crucial thing to keep in mind is that the £50 limit is per benefit, not per year. This means you can give multiple trivial benefits throughout the year, as long as each one is under £50. For instance, you might treat your staff to a meal or small gift for their birthday, and then later in the year, give them something else during the Christmas period. 

If a gift exceeds £50, it no longer qualifies as a trivial benefit. In that case, you’d have to pay tax and National Insurance on the entire value, not just the excess over £50. 

Trivial Benefits for Directors: What You Need to Know 

If you’re a director of a limited company with fewer than five shareholders, the trivial benefits rules still apply, but there’s an annual limit of £300 for trivial benefits given to directors or their family members. This allows directors to enjoy the same perks as staff, within reason. 

For example, as a director, you could give yourself and your spouse six £50 gifts throughout the year, and as long as the total value doesn’t exceed £300, no tax is due. 

Why Trivial Benefits Matter for Businesses 

Using trivial benefits can help create a positive workplace culture without breaking the bank. Small perks like these make employees feel appreciated and valued, which can boost morale, improve job satisfaction, and ultimately help with retention. 

From a financial standpoint, trivial benefits offer a smart way to reward staff without the added cost of taxes or National Insurance contributions. Plus, as long as these perks are documented and tracked in your accounts, they won’t add any extra complications to your bookkeeping. 

How to Keep Trivial Benefits on Track 

While trivial benefits are easy to give, it’s still important to track them properly in your bookkeeping. Here’s how: 

1. Keep receipts for all benefits provided, and ensure each one is under £50. 

2. Record details of the gift, including the date and who received it. 

3. Ensure the benefit meets the criteria—no cash or performance-related gifts. 

Accurate bookkeeping will ensure you can demonstrate compliance with HMRC’s rules, should they ever be questioned. 

Conclusion

Trivial benefits might seem small, but they can make a big difference to your team’s happiness—and your business’s tax bill! By offering thoughtful, low-cost perks, you’ll not only boost morale but also keep your accounts in good shape.  

Need help keeping track of your business’s perks and expenses? Let’s talk about how I can help you keep your finances compliant and tax-efficient throughout the year. Drop me a message to learn more!