Hi everyone. It’s Nishi Patel from N-Accounting and in today’s video I want to talk about trivial benefits. There’s a rule within the task world which lets you by your employees’ gifts which are worth no more than 50 pounds at a time. And when you give those employees that gift, that gift does not actually count as a taxable salary.
This can be really good if you want to give them something to say thank you because you can get them something that is worth 50 pounds and then essentially, they don’t get taxed on it. So it’s really better than them just giving them 50 pounds. You can do that for employees who aren’t directors, you can do this as many times as you want in the year as long as it then doesn’t look like you are replacing their remuneration. So it has to be within reason although the HMRC have not specified exactly how many times that is yet. Anything within reason and you can get this employee a 50 pound gift. So if you’re a director watching this, and then you might also be interested to know that your business can actually get you a 50 pound gift as well, and you don’t have to declare it as taxable income.
The one slight difference in rules between employees and directors though is directors when it comes to trivial benefits, they are actually limited to 300 pounds of trivial benefits a year. What that means is your company for example, as a director could get you a 50 pound gift voucher for a particular store and, and then it could get you another five of those vouchers after that. And then that would make up to 300 pounds. One thing you’ve got to remember though as a director and as with anything to do with trivial benefits is if you get let’s say two 50 pounds, August vouchers, HMRC when they are working out will actually combine them to make a hundred pound voucher. And that will no longer be allowable as part of the trivial benefits rules. So if your plan is to buy like six vouchers for various stores it’s really important that they are different stores within that year and not the same store, otherwise it’ll look like one big purchase where you have the whole thing being disallowed and you will get taxed on it.
So what I want to get across is that trivial benefits if you are not using your allowances for them as a director and even if you are not planning to do it as a director, you want to get your employees something nice. It can be a great way to motivate your team just by getting them those gifts. Especially if there is something they particularly want and you can get it for them as a thank you for some hard work although not a replacement for their salary. Then it’s really worth using it. Cause you’ll save money as an employer, your employees will save money. And as a director it’s a great way to get something out of your business without having to pay salary and dividend taxes as well. So definitely yeah, definitely worth looking at. So if you want to find out more about trivial benefits or any other tax savings and profitability improvements within your business then get in touch, book yourself in for a free strategy session. I would love to explain how we can help you more as your accountants and learn more about what you want to do with your business.