
There is a trivial benefit-in-kind (BiK) exemption for small, non-cash employee benefits. This exemption applies to BiKs classified as 'trivial,' helping employers simplify the handling of these benefits while offering a tax-efficient way to give small gifts to staff.
However, the "trivial" benefit rules actually present an excellent opportunity for employers to provide small rewards and incentives. The key condition is that the gifts must not be a reward for services performed or part of the employee’s duties. Gifts for personal milestones, such as the birth of a child or a marriage, as well as other goodwill gestures, usually qualify.
Employers benefit as these trivial BiKs do not need to be included in PAYE settlement agreements or reported on P11D forms. Additionally, they are exempt from Class 1A National Insurance contributions.
To qualify for the tax exemption, trivial BiKs must:
- Not be cash or a cash voucher;
- Cost £50 or less;
- Not be part of a salary sacrifice or other contractual arrangement;
- Not be given in recognition of services performed by the employee or in anticipation of such services.
For directors or office-holders of close companies and their families, there is an annual cap of £300. Each gift must still adhere to the £50 limit, but this allows up to £300 of non-cash benefits per person each year. This cap does not apply to employees. If the £50 limit is exceeded for any gift, the entire value becomes taxable.
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