Trivial Benefits in Kind
13 December 2019
In light of the fact that many employers choose to present their staff with various gifts and benefits over the festive period, the most recent Employer Bulletin provided some useful information relating to Trivial Benefits.
The guidance was aimed to ensure that employers treat benefits correctly in terms of the application of tax and National Insurance (NI) and whether they need to notify HMRC about a benefit or not. A benefit can be classed as a Trivial Benefit when all the rules below apply:
- The cost of the benefit does not exceed £50
- The benefit is not in the form of cash or a voucher redeemable for cash
- The benefit is not provided as part of salary sacrifice arrangements or any other contractual obligation
- The benefit is not provided in recognition of services
Contractual obligation
The Bulletin offered tips around the area of contractual obligation and advised businesses that any of the following may be viewed as contractual in the eyes of the law:
- A side letter to the main contract document
- A staff handbook
- A letter of appointment
- A redundancy agreement
- An employer union agreement
- Any legitimate expectation
There is a precautionary note that a ‘legitimate expectation’ may be in place where there is no explicit contractual obligation. The example used is that of a company that provides its staff with a cream cake every Friday. Even though this benefit isn’t confirmed in a contract of employment, it has become a legitimate expectation and staff will expect to receive their cream cake on a weekly basis.
Benefit should not exceed £50
There is also advice around the treatment of a benefit when it is offered via the platform of an app which gives the employee access to products at a discounted rate or to services which the employee is then responsible for paying for themselves. The benefit that the employer is offering is access to that app and not to the services it offers, e.g. hailing a taxi. If the cost of providing the app exceeds £50, then this cannot be classed as a Trivial Benefit.
If, on the other hand, the company is paying for services provided to a staff member, so if they pay for medical advice at £49 per session, for example, once the employee has more than one session of medical advice, the benefit will cease to be classed as a Trivial Benefit as the total is above the £50 threshold.
To revisit the example of using an app for hailing a taxi, if a business provides an employee with access to an app and also pays for any personal trips (exclusive of any taken for business purposes) then the cost of the trips combined with the cost of providing the app would need to be used to establish whether the benefit can be classed as trivial or not.
Recognition of services
The final pointer gave addresses the issue of providing rewards for services. If a benefit is provided in recognition of something that an employee is contractually obliged to do, this would not satisfy the Trivial Benefit rules. The scenario provided is where an employer rewards staff by buying them lunch to ensure that they work through their lunch break. As they are undertaking work that they would ordinarily do as part of their contract and receiving a benefit for it, this would not be classed as a Trivial Benefit.
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