The trivial benefits exemption allows you to provide benefits to employees without your employee suffering a tax charge on the benefit. Likewise, there is no Class 1A National Insurance for you, the employer, to pay.
To count as ‘trivial’ for the purposes of the exemption, the benefit must meet all of the following conditions:
- the cost of providing the benefit is £50 or less.
- the benefit is not cash or a cash voucher.
- your employee is not contractually entitled to the benefit.
- the benefit is not provided in recognition of particular services.
Unless your company is a close company (generally a small company) and trivial benefits are provided to a director or other office holder, there is no limit on the number of trivial benefits that you can give to a particular employee in the tax year.
However, the cumulative provision of trivial benefits to directors or other office holders of close companies is capped at £300 for each tax year.
If you provide the benefit to a number of your employees and it is impracticable to work out the actual cost of each individual benefit provided to each individual employee, you can work out the average cost instead. As long as this does not exceed £50 the cost condition will be met.