Up till now, your company had a staff welfare benefit of £150 per employee, which can be utilized at a staff Christmas party or other company events. There might have been occasions where you thought to gift your employees or throw a small staff function or even buy a treat for yourself as the director.
What is a trivial benefit P11D in a limited company?
Now HMRC has introduced a new benefit, namely Trivial Benefit. This benefit allows employers to provide small gifts and entertainment without having to include these within the PAYE agreements or disclose under the P11D forms. In the past, trivial benefit included the provision of soft beverages whilst at work and occasional small gifts.
The changes have made it much more flexible for your company to utilize this benefit, however, you need to be wary about the rules.
Trivial Benefit Rules
In order for the trivial benefit to be applicable the following conditions must be met:
- The trivial benefit should NOT exceed £50 at a particular time
- It should not be a cash benefit (gift vouchers are acceptable, as long as they cannot be exchanged for cash)
- Should not be part of a contractual obligation
- Cannot be replaced by services that should be performed as part of regular employment duties
Things to watch out for
- Not to spend more than £50, even a penny more than £50 will make the full amount of the benefit taxable.
- It is a MUST to incur a cost, you cannot claim this benefit of £300 at the end of the year.
- Need to be paid directly from Business Bank Account
How will trivial benefit changes affect directors?
As a director, you can also claim trivial benefits, as well as your family members, however, please note the above rules still apply to you. As a director, there is an annual threshold of £300. If you provide this benefit to one of your family member who is not a director or employee of your company, this benefit will be deducted from your benefit allowance.
So what can you treat your employees and yourself?
Provided the trivial benefit is not provided in the form of cash, it could be anything below £50 per head such as:
- Gift Hampers
- Taking your staff for a meal
- Store vouchers which can not be exchanged for cash
More information can be found on HMRC link here.
How We Can Help You! – WIS Accountancy
Knowing what benefits to claim and staying within the threshold can be a difficult task. WIS Accountancy has helped many owner-managed business to effectively plan your obligations in an effective and stress-free manner. WIS Accountancy also provides additional services such as business start-up advice, payroll services, bookkeeping, self-assessment and computation of your VAT, Corporation Tax, and Final Accounts.
Contact us today for a free consultation.