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Document updated/added on 13.01.2021

Topic: Employment tax

Letter to employees regarding trivial benefits
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Letter to employees regarding trivial benefits

Letter to employees regarding trivial benefits

The tax and NI exemption for trivial benefits is a great way to reward your employees with small gestures. You need to maintain certain records as a matter of best practice.

Tax-free rewards

Since 6 April 2016 a benefit provided to employees that costs an employer no more than £50 is exempt from tax and NI. Subject to the conditions explained below, the tax and NI exemption can apply to as many perks as you want to give your employees. If a perk is already exempt, e.g. the firm’s Christmas party, that exemption takes precedence over the trivial benefits exemption.

Aside from the £50 limit, the perk must not be:

  • in cash or a voucher convertible into cash. A gift voucher, for example to spend in a shop is fine because it can only be exchanged for goods or services and not cash
  • a reward for an employee doing their job
  • provided as a contractual right of the employment.

It’s good practice to keep a record of trivial benefits made available to each employee and director. This will come in useful if HMRC starts asking questions about what the transactions are for. Use our Letter to Employees Regarding Trivial Benefits to notify employees what trivial benefits they have received in the tax year.

 

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