HMRC have always agreed that trivial benefits may be exempt from taxation via from P11D, however there has never previously been any guidance on what exactly constitutes a ‘trivial benefit’, until now.
From 6th April 2016, HMRC have changed their guidance to define that a ‘trivial benefit’ is exempt from tax if all of the following conditions are met:
- the cost of providing the benefit does not exceed £50 (or the average cost per employee if a benefit is provided to a group of employees and it is impracticable to work out the exact cost per person)
- the benefit is not cash or a cash voucher
- the employee is not entitled to the benefit as part of any contractual obligation (including under salary sacrifice arrangements)
- the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services)
Please also bear in mind, directors of close companies are capped at a total cost of £300 during the tax year.
For more guidance, please see the HMRC website at https://www.gov.uk/government/publications/tax-exemption-for-trivial-benefits-in-kind-draft-guidance/tax-exemption-for-trivial-benefits-in-kind-draft-guidance