The Festive Joy of Trivial Benefits

Christmas is coming, so why not treat yourself with a little help from HMRC? If you haven’t yet used your Trivial Benefits, they could make a sizable contribution towards a few festive luxuries.

These are one of the simplest and most overlooked ways for company directors to enjoy small, tax-free perks from their own businesses. Although modest in value, they can add up and are completely legitimate under HMRC rules when handled correctly.

Directors of limited companies can receive up to £300 per year in small, tax-free perks (each worth no more than £50 including VAT). It could be a bottle of wine, a hamper, or Christmas shopping paid for with vouchers that cannot be exchanged for cash.

A trivial benefit is considered a small gift or gesture provided by a company - to either an employee or director - that is exempt from both income tax and National Insurance and which the company does not need to report on a P11D form.

For employees there’s no cap on the number of these they can receive each year, as long as they meet the HMRC rules. But for directors of small family companies the rules are different.

For company directors of ‘close’ companies (typically family-run or with 5 or fewer shareholders) there are a few extra rules but these still mean your company can gift you up to £300 worth of benefits a year. Here’s how it works:

• A director of a close company can receive trivial benefits worth up to £300 per tax year in total.
• Each individual benefit must still meet the usual conditions (costing no more than £50 inc VAT, not cash or exchangeable for cash, and not work-related).
• Gifts to members of the director’s family or household are allowed, but the value of those gifts counts towards the director’s own £300 total.

How to Claim and Record Trivial Benefits

Although trivial benefits are exempt from tax, it is still important to document them properly. HMRC does not require a formal claim form, but you should keep simple records to show that the rules were followed.

1. The company should pay for the benefit directly.
2. Keep receipts for each item or occasion.
3. Note the date, cost, and who received the benefit.
4. Record it in the company accounts as “staff welfare” or “trivial benefits.”

Provided the criteria are met, there is no need to include these benefits on a P11D, and they do not attract corporation tax or National Insurance.

Key Points to Remember

• The cost of each benefit must not exceed £50 including VAT.
• The benefit cannot be cash or a voucher that can be exchanged for cash.
• It cannot be a reward for work or performance.
• Directors of close companies are limited to £300 per tax year.
• Keep simple records to support your claim.

So, let your company treat you this Christmas by making sure you use these small perks.

If you want to make sure your use of trivial benefits is compliant, contact us on hello@richardsonswift.co.uk for advice.