- First things first
- What are trivial benefits?
- Why are trivial benefits so popular?
- Why does there need to be a restriction on employee benefits?
- Advantages of trivial benefits
- 4 facts about trivial benefits
- Why do employees love trivial benefits?
- Why would employers want to give trivial benefits?
- Examples of other non-taxable benefits
- Looking for a bit more information?
- In summary
- Perkbox: give your team awesome perks
First things first
The fact of the matter is that trivial benefits are essential in a modern day workplace, as a way of engaging with a diverse workforce and garnering a positive public image.
However, there is a catch (as always). It’s one that any good HR professional can smell from a mile off: it’s all very well, this idea of handing out lots of goodies to your workforce... but what about tax?
It's a valid concern and one that needs clearing up. We all know it's next to impossible to give anything of worth as an employer without a tap on the shoulder from HMRC. However, there are clear parameters set by the government to distinguish a 'trivial' benefit from an asset.
What are trivial benefits?
Trivial benefits are best described as small ‘token gifts’, given by management to their employees. This can come in any shape or form but generally speaking, they are typified by gestures such as bottles of wine, chocolates, beer for the office, or team lunches. Essentially they're little everyday sweeteners that keep the morale of the company up.
A benefit can be 'trivial' if it meets all the following conditions :
- Costs £50 or less to provide
- It isn't cash or a voucher
- It isn't a reward for work or performance
- It isn't in the terms of an employee's contract
In fact, a better term for trivial benefits would be everyday perks at work. The things that you don’t expect from work but that occasionally find their way into your office. We’ve all seen them in practice and have contributed to them ourselves.
Examples of a trivial benefit include:
- A few drinks on a work night out
- A pizza in the office on a Friday
- A birthday present on employee's birthdays
- A summer party
The key distinction when defining trivial benefits is that they're not intended to add financial value to an employee's pay-check. Nor can they be given in lieu of payment. They're trivial in the traditional sense of the word; having little actual value.
Having such a definitive term for these gestures can be a little constricting - a little stressful even - but the trend has become a cultural aspect of working in a modern workplace. It's outgrown its token status and has become part of everyday life. As such the powers at be had to figure out a way of regulating it.
Why are trivial benefits so popular?
Well, put simply, the job market is radically different now compared with a decade ago. There's a whole load of 'company benefits' that have gone from being an out-of-the-ordinary perk, to part and parcel of most job descriptions.
In part, this has all been a byproduct of the slow-growth economic climate that most young people have graduated in to. As a way to tackle slumped salaries, employers have had to find innovative new ways of catching top talent's attention in a busy job market. Trivial benefits presented itself as one of the most effective ways of doing so as its core principle is to make life at work more enjoyable.
However, this doesn't grant employers a free license to buy whatever they want for their workforce. As the wise James Blake once said, there should be a "limit to your love."
Why does there need to be a restriction on employee benefits?
Although it might seem like a gross over-extension of the government's remit to restrict employee benefits, there are practical reasons for implementing regulations on gifts.
To give an example, imagine that it’s the end of the year and you’re looking to give out bonuses. You know that a cash-bonus will be subject to Income Tax and National Insurance, so instead of a "payment", you offer a car or holiday. If there were no levies placed upon these types of gestures, the tax system as we know it would be defunct. Gifts or assets are commodities in themselves and if used as a means of payment, they must be taxed as such.
Examples of benefits not allowed under 'trivial benefits':
- Gifts or incentives based on targets, results or performance
- Taxis when employees work late
- Providing working lunches for employees
Advantages of trivial benefits
Offering your teams trivial benefits has many advantages, including:
- A generous allowance: Each employee can receive trivial benefits worth up to £300 per year. Each individual benefit or gift must not cost more than £50.
- No tax or any NI payments: Because trivial benefits are so small they're exempt.
- No notification to HMRC: This cuts down on a lot of administration time.
- Additional wellbeing support: Treat your employees to new running trainers or a therapy session. As long as each costs £50 or less.
- No inclusion in employee contracts: Give trivial benefits as and when you like.
4 facts about trivial benefits
For a while the definition around trivial benefits wasn't clear. In fact, the legality of giving your staff tax-free gifts was seen as a bit of a grey area. However, as of 2016, HMRC passed legislation that set out clear limitations to trivial benefits, while creating a further category: benefits in kind. To find out more about the rules and regulations surrounding benefits of this description, we've written a guide with everything you need to know.
1. Price cap
The clearest parameter to bear in mind is that any ‘gift’ given as a trivial benefit cannot have cost you more than £50. This is irrespective of how much has been paid for it but rather its market value. The reason being that if you give your employees £500 worth of clothes from your manufacturing business, while it didn't technically ‘cost’ you in money, it still has great value and could be sold on for personal profit.
The price cap is per person, which can be slightly difficult to calculate if a company lunch has cost £800 but a quarter of those eating ate half of the food. How is this calculated? To avoid splitting hairs in cases like this, HMRC have also put a yearly restriction of £300 per employee.
It has to be a material offering - you cannot simply hand someone a crisp fifty. This also includes any voucher that can be redeemed for cash. This is just too close to being a form of payment and so as a blanket rule, all cash gifts must be recorded and incorporated into the tax.
3. It isn’t a bonus
This has to be a purely altruistic offering. While that’s pretty difficult to define in a business environment, the best rule of thumb is that they cannot replace a bonus. So if someone’s landed you a new client and you give them a voucher, that isn't a trivial benefit.
4. It isn’t in their contract
Trivial benefits have to be one-offs or random acts of kindness. There cannot be a formal agreement between employee and employer about their supply and frequency. Again this resembles a type of payment.
Why do employees love trivial benefits?
Well, this might seem rather obvious. After all, who doesn’t like a little pick-me-up present now and again? While this is undeniably true, it runs a little deeper. There is a hunger for ‘ethical workplaces’ that care for their employees and part of this is having company-wide reward scheme for hard work. Employees want to feel valued in a modern workplace and a salary simply isn’t a big enough gesture. In fact, it’s not really a gesture at all - it’s a requirement by law.
On top of this, trivial benefits might not (and cannot) cost the employer much but it can make the world of difference to your employees, particularly your junior staff who need that little bit extra.
Why would employers want to give trivial benefits?
Employee motivation is a crisis for many companies in this day and age. Managers feel at an impasse with their younger workforce, finding it difficult to unlock their potential and keep them in the workplace for more than a year or two.
Much of this is a cultural shift in the way people work. Employees now lack a sense of allegiance, flitting between an average of 6 companies in their life. However, this is in part the fault of corporate culture that neglects to look after their employees socially and emotionally, and especially overlooks the importance of corporate benefits. A company that bucks the trend and engages with its employees socially will build a stronger and better connected workforce. This will ultimately boost your productivity and retention rates.
There's any number of ways that you can spin the virtues of company benefits but ultimately there's one key advantage - they make for a happier workforce.
Examples of other non-taxable benefits
There are other more high-value benefits that you can offer your employees that are also tax-free. These include:
- Employer contributions to a registered pension scheme
- £500 worth of medical treatment to help an employee get back to work, after an absence of at least 28 days
- Expenses for home office equipment
- Parking near the office
- Childcare vouchers
- Meals in canteen
Looking for a bit more information?
If you're looking to upgrade your current benefits offering, research what other companies are doing and contact different benefits providers. To find out more about adding value to your employees' lives, just click the link on the side of this page.
Trivial benefits are best described as small ‘token gifts’, given by management to their employees. This can come in any shape or form, but generally speaking, they are typified by gestures.
They're not intended to add financial value to an employee's paycheck and they can't be given in lieu of payment. But as they're still defined as a benefit - there are clear parameters set by the government to distinguish a 'trivial' benefit from an asset.
What makes a benefit trivial?
- There is a price cap of £50 per benefit.
- It must not be cash.
- It isn't a bonus - it must be a purely altruistic offering.
- It isn't in their contract - it has to be a one-off or random act of kindness.
Perkbox: give your team awesome perks
Choosing a selection of attractive, well-rounded benefits can be a difficult process. Genuinely good perks are usually quite expensive and demand a lot of admin. That's why Perkbox exists: to give teams awesome perks, hassle-free. Designed to support your team’s financial, emotional and physical wellbeing, our selection of benefits, discounts, salary sacrifice schemes and more cover all bases.
If you want to find out how you can use Perkbox, request a demo, and a member of our team will get back to you.
Trivial benefits: your FAQs answered
What is a trivial benefit?
It's good to think of trivial benefits as small gifts that employees receive from management. They're not part of a performance incentive and include things, such as Christmas and birthday presents, anniversary flowers, and meals. They're called trivial because they don't have a big monetary value.
How many trivial benefits can you have per year?
While there isn't a limit on the number of trivial gifts an employee can receive, the amount spent on them can't exceed £300 per year. Each individual gift must also cost £50 or less. There is, however, a limit on the number of trivial gifts family members and company directors can receive.
How can you claim VAT on trivial benefits?
Yes, you can. As long as you have a receipt or invoice that contains the supplier's VAT number. While claiming back VAT on the odd £50 purchase doesn't seem like a big deal, over time it will add up to a considerable saving. This is why lots of companies love using trivial benefits, as they're both very cost-effective and great at boosting engagement and employee morale.