Trivial Benefits for Small Business

Do you run a small business? If so, you know how important it is to keep your employees happy and productive. There are many ways to accomplish this goal – competitive wages, benefits, promotions… they all play a role in creating an attractive work environment for your employees.

But what if something else could sweeten the deal and make them want to stick around even longer? Something that might seem trivial initially but has real value from an employee morale standpoint? The answer is trivial benefits!

These smaller-scale perks don’t require much investment or commitment on your part but can have a significant impact on employee loyalty and engagement long term.

In this blog post, we’ll look at why providing trivial benefits for small businesses makes sense and examples of things you can do quickly (and affordably!) to reward your staff!

What is a Trivial Benefit?

In April 2016, HMRC introduced a trivial benefit scheme, where businesses can provide employees with a gift of up to £50 without having to pay tax and National insurance. Certain conditions need to be met, which we will discuss and also look at how to account for it.

Trivial Benefit Rules

These are the trivial benefit criteria as set out by HMRC:

• The benefit-cost £50 or less
• It can not be cash or a cash voucher
• It is not a reward for their work performance
• It is not part of the terms of their contract
• Directors of a close company can’t receive more than £300 per tax year – A close company is a limited company with 5 or fewer shareholders.

Trivial benefits also can’t be part of salary sacrifice arrangements. Salary sacrifice is an agreement between employer and employee to reduce salary for a non-cash benefit.

Examples of Trivial Benefits?

We have already looked at a trivial benefit, but what are examples of trivial benefits? Below are a few trivial benefits examples:

• Gift voucher for (that can’t be exchanged for cash)
• Chocolates
• Taking employees out for a meal – if you take employees out for a meal, it can be difficult to calculate the cost per employee; the average cost per employee is then acceptable by taking the total cost and dividing it by the number of employees.
• Buying a present including birthdays, retirement,
• Flowers

If you have another idea for purchasing a trivial benefit, look at the criteria and see if it qualifies.

If you are unsure if a gift is a trivial benefit, check with your accountant for clarity.

Below are some examples that do not qualify:

• A gift card for £15 that is topped up on three further occasions of £15, as this has exceeded the £50 limit
• A gift purchased as a well done for reaching a target in your job.
• A taxi if an employee works late, as it is work-related
• For a working lunch, as it is working rather than social
• Pre-loaded cash cards

Trivial Benefits for Directors of a Close Company

Trivial Benefits are only available to a close company – a limited company with 5 or fewer shareholders.

There are rules if you are a limited company director: each director can’t receive more than £300 per year. If you regularly give out trivial benefits, ensure that you keep track of how much for each director.

The advantages of Offering a Trivial Benefit

Small businesses can reap many rewards by providing their employees with trivial benefits.

Some of these advantages include:

• You don’t need to pay tax and national insurance
• Increased employee loyalty and engagement over time
• Boost morale and productivity in the workplace
• Shows employees that you care about them and appreciate their hard work
• Low cost and easy to implement – many trivial benefits can be given out for free or at a very low cost

All these advantages can lead to a more productive, positive work environment for your team. If you’re looking for ways to show your employees how much you appreciate them, consider giving out some trivial benefits!

Accounting for Trivial Benefits

You provide trivial benefits as a business, but how do you account for them?

On the QuickBooks website, the advice is to set up an expense code on the income statement (profit and loss) called ‘non-taxable employee benefits’. It will make it easier to keep track of all payments made.

Trivial Benefits FAQ

Below are a few FAQs relating to trivial expenses to help provide clarity:

Can I give a cash or cash voucher?

No, HMRC doesn’t classify a cash voucher as a trivial benefit, but you can purchase gift vouchers for employees.

Do I need to report trivial benefits?

No, trivial benefits don’t need to report on a P111d

What happens if the Trivial Benefit is over £50?

If it is over £50, it can’t be claimed as a trivial benefit and must be reported in the usual way, and you will have to pay tax on it.

Can I claim VAT on a trivial expense?

Yes, if the benefit is less than £50 and includes VAT, you can claim it as part of the VAT return.

Can I do multiple trivial Benefits in the tax year?

Yes, but you must ensure that any directors do not exceed £300

Trivial Benefits Conclusion

Small businesses can reap many rewards by providing their employees with trivial benefits. Some of these advantages include increased employee loyalty and engagement over time, boosted morale and productivity in the workplace, showing employees that you care about them and appreciate their hard work, low cost and easy-to-implement.

Many trivial benefits can be given out for free or with little actual value. All these advantages can lead to a more productive, positive work environment for your team. If you’re looking for ways to show your employees how much you appreciate them, consider giving out some trivial benefits!