Trivial Benefits in Kind this Christmas
Christmas is a time for giving. As an employer, when it comes to providing gifts to your employees (such as wine or hampers), you want to make sure you know the rules so you can take advantage of the maximum benefit values without upsetting the taxman!
So, as we approach Christmas, it's a good time to be reminded of the exemption rules regarding "Trivial" Benefits in Kind as they can be particularly useful this time of year.
Where the gift meets the full criteria below, this is known as a "trivial" benefit so you don't need to let HMRC know - and you won't need to pay National Insurance Contribution (NIC) or tax.
The gift meets the criteria if:
- it costs £50 or less to provide (or an average cost per employee if the benefit it provided to a group of employees and it is impractical to work out the exact cost per person)
- it isn't cash or a voucher
- it isn't a reward for work or performance
- it isn't in the terms of their contract
If your gift does not meet all the above points, then it must be taxed in the normal way and subject to any other exemptions or allowances.
Exemptions for Directors
For Directors, there is an increased upper limit of £300 per Director - although each individual gift is still subject to a £50 limit, despite the overall annual limit of £300.
Please note that these limits of £50 per employee and £300 per Director are annual and cannot be rolled forward.
Christmas Parties - virtual parties now also included!
An employer can host an annual event (it doesn't have to be held at Christmas!) costing less than £150 per head without having to pay the associated tax and NIC costs - as long as all employees are invited.
However, all costs relating to the event must be included as part of the calculation "per head". This could include:
- Food and drink
- Transport and accommodation
This list is not exhaustive - all costs associated with the event must be included and if the total cost is higher than the £150 per head exemption then the whole amount is taxable.
Where all of the above conditions are met, HMRC has now confirmed that the exemption will apply to any virtual office Christmas parties.
If you have any queries, please get in touch with us and we would be happy to help.