Guide to Trivial Benefits

Finding ways to make your limited company’s money go further is always satisfying and thanks to the changes to trivial benefits, this just got easier. If you’re looking for guidance about what trivial benefits are or how you claim, give our handy guide a read.

What are trivial benefits?

Since 6th April 2016, a company can provide employees and directors (not shareholders) with ‘trivial benefits’ which cost up to £50 a time, with no tax or National Insurance implications. For contractors working via a close company (a limited company that’s run by 5 or fewer shareholders), there is a £300 annual cap for these trivial benefits.

How much can I claim?

There is no limit on the number of ‘benefits’ provided, as long as they do not exceed £50 at a time, or £300 in total over the year. For example, there could be 6 claims of £50, or 30 claims of £10. If any ‘benefit’ exceeds the £50/£300 limits, they are no longer allowable via the business. You don’t need to pay tax or National Insurance or let HMRC know.

What counts as a trivial benefit?

As long as you meet the following criteria, you won’t need to won’t need to pay tax:

• The benefit costs £50 or less
• The benefit isn’t cash or a cash voucher
• The benefit isn’t a reward for performance or good work
• The benefit isn’t an ongoing or recurring cost (such as a membership)
• The benefit isn’t in the terms of their contract

What can’t be claimed?

Since the rules changed, there are also certain things which can no longer be claimed:

• The gift cannot be in the form of cash or cash vouchers (i.e. vouchers that can be exchanged for cash). So, shop vouchers would be allowable, as long as they cannot be exchanged for cash
• The employee should not be entitled to the benefits as part of any contractual arrangements (this includes any salary sacrifice arrangements)
• The ‘benefits’ should not be provided in recognition of particular services performed by the employee, as part of their employment duties.
• The ‘benefits’ cannot be a regular payment, i.e. gym membership, employee of the month
• The £50/£300 amounts are limits and not allowances and therefore receipts must be held to back-up the claims and an expense must have actually have been incurred (rather than simply claiming the full allowance at the end of the year). In addition to this, you must be careful not to spend over £50 to avoid the whole expenditure being classed as a taxable benefit rather than just the excess

How can Nixon Williams help me?

Finding the best advice about your finances as a contractor isn’t always easy. At Nixon Williams, we’re here to make life as easy as possible for you. Whether you’re looking for ongoing support with your accounts or advice about expenses, we can help.

To help answer some of your questions, we’ve put together our free resources. If you can’t find what you’re looking for, just get in touch and we’ll answer your query personally.