Trivial Benefits - tax deductable and tax free gift to employees

[Karimbo]

text from HMRC.GOV.UK​

​

Tax on trivial benefits​

You don’t have to pay tax on a benefit for your employee if all of the following apply:

• it cost you £50 or less to provide
• it isn’t cash or a cash voucher
• it isn’t a reward for their work or performance
• it isn’t in the terms of their contract

This is known as a ‘trivial benefit’. You don’t need to pay tax or National Insurance or let HM Revenue and Customs (HMRC) know.

sOURCE : https://www.gov.uk/expenses-and-benefits-trivial-benefits



I was wondering how amazon vouchers plays into this. I know some people will give £50 amazon voucher 6 times a year to their employees or themselves. But isn't this just analogous to cash? The employee receives £300 amazon vouchers and uses it o n£300 worth of stuff they would have bought with their own money so it's as if they received cash.

The rules state it shouldn't be cash or a cash voucher.

Isn't an amazon coupon a cash voucher?

I was thinking of perhaps just using my business debit on my everyday grocery shopping and then writing off the expenditure as a trivial benefit. Would that be smarter than the thin line of amazon voucher =/= cash voucher.

 

[Newchodge]

text from HMRC.GOV.UK​

​

Tax on trivial benefits​

You don’t have to pay tax on a benefit for your employee if all of the following apply:

• it cost you £50 or less to provide
• it isn’t cash or a cash voucher
• it isn’t a reward for their work or performance
• it isn’t in the terms of their contract

This is known as a ‘trivial benefit’. You don’t need to pay tax or National Insurance or let HM Revenue and Customs (HMRC) know.

sOURCE : https://www.gov.uk/expenses-and-benefits-trivial-benefits



I was wondering how amazon vouchers plays into this. I know some people will give £50 amazon voucher 6 times a year to their employees or themselves. But isn't this just analogous to cash? The employee receives £300 amazon vouchers and uses it o n£300 worth of stuff they would have bought with their own money so it's as if they received cash.

The rules state it shouldn't be cash or a cash voucher.

Isn't an amazon coupon a cash voucher?

I was thinking of perhaps just using my business debit on my everyday grocery shopping and then writing off the expenditure as a trivial benefit. Would that be smarter than the thin line of amazon voucher =/= cash voucher.

A cash voucher is something that can be directly exchanged for cash - postal order, pre-paid Visa card, etc. An Amazon card can only be exchanged for goods.

 

[Karimbo]

A cash voucher is something that can be directly exchanged for cash - postal order, pre-paid Visa card, etc. An Amazon card can only be exchanged for goods.

Ok that makes sense.

I actually have no need to buy £300 worth of stuff from amazon.

If I just paid for my groceries with business debit card would that be a valid trivial benefit?

 

[Newchodge]

Ok that makes sense.

I actually have no need to buy £300 worth of stuff from amazon.

If I just paid for my groceries with business debit card would that be a valid trivial benefit?

As long as it was no more than £50 each shop.

 

[Karimbo]

Would it still qualify if I paid £70 for shop costing of £45 & £25 items. They are two sepoerate items each worth the sums but were paid together (just asking because I can retroactively put things through as trivial benefits in this tax year, I've put them through as DLA drawings). I still have the receipts.

Also am I right in thinking there is no annual limit if your business is not a close company. (6 or more directors).

So in theory all the directors could agree to give each other £20,000 worth of trivial benefits, spend it all each tax year on household spending with an agreement in place that it will be fully expense trivial benefit.

This would be a massive saving as directors could be on 45% tax bracket. plus VAT recalimed by the company.

Is that really allowed, unlimited total cap on trivial benefits?

 

[DWS]

Would it still qualify if I paid £70 for shop costing of £45 & £25 items. They are two sepoerate items each worth the sums but were paid together (just asking because I can retroactively put things through as trivial benefits in this tax year, I've put them through as DLA drawings). I still have the receipts.

Also am I right in thinking there is no annual limit if your business is not a close company. (6 or more directors).

So in theory all the directors could agree to give each other £20,000 worth of trivial benefits, spend it all each tax year on household spending with an agreement in place that it will be fully expense trivial benefit.

This would be a massive saving as directors could be on 45% tax bracket. plus VAT recalimed by the company.

Is that really allowed, unlimited total cap on trivial benefits?

I think you will struggle to convince HMRC that giving all Directors £20k in trivial benefits is not in some way ‘a reward for their work or performance’
Also if it is being discussed and agreed before hand I would suggest it is more likely to be classed as remuneration.

 

[UK Contractor Accountant]

6 or more directors).

Shareholders not Directors.

 

[Karimbo]

Shareholders not Directors.

wow. Does that mean you could give 5 people 0.1% equity share and no longer be classed as a close company?

 

[Bobbo]

wow. Does that mean you could give 5 people 0.1% equity share and no longer be classed as a close company?

No. CTA 2010 S439(3)

 

[Karimbo]

Thanks, I see. I think it's still open to abuse

I think you will struggle to convince HMRC that giving all Directors £20k in trivial benefits is not in some way ‘a reward for their work or performance’
Also if it is being discussed and agreed before hand I would suggest it is more likely to be classed as remuneration.

I think any responsible company would set a budget for how much the company can spend on benefits to employees. So that in itself cannot be a reason to class this as renumeration.

I think it's down to a sniff test. If directors are earning £15K and geting £15K of trivial benefits, it would be a bit amiss. If the directors were earning £120K and getting £15K of trivial benefits, it might just swing by under the radar.

No. CTA 2010 S439(3)

I see, There are loads of companies that are famiy owned maybe 2 or 3 generations down where grandchildren of the founder have in effect inherited the business. Those types can have many sharholder directors which would not be classed as close company by that defintiion who can all collude and explout this trivial benefits.

The £50 value is a pretty big limit factor though, these days there's only so much decent "gifts" you can buy for less than £50.