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As a limited company director, there may be instances where you wish to treat your employees. And the good news is there may be instances where this will not be treated as a taxable benefit, as long as it meets certain requirements.
If you’re looking for a way to provide tax-free gifts to staff, our guide to trivial benefits outlines all you need to know.
A trivial benefit is a tax-free gift which an employer can gift to the employees on an occasional basis. In order to be exempt from tax and National Insurance contributions, the cost must follow a specific set of criteria for directors of close companies.
Unsure whether the cost is allowed? Answer the questions below for reference:
If the answer to any of the above questions is yes, the benefit will be treated as a taxable benefit.
If the answer to the above questions is no, this means the cost will qualify as a ‘trivial benefit’: in this instance, you don’t need to inform HMRC, the benefit won’t be subject to tax and National Insurance contributions and won’t need to be declared on a P11D form.
A close company is one with five or fewer ‘participators’ or a company which all participators also act as directors. A participator is any party who has a financial obligation in the limited company.
If you are the director of a close company you can still receive trivial benefits. However, they are capped to £300 per director per year.
The following examples can be counted as a trivial benefit and therefore will not be liable for tax:
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Appointing an accountant can save you time and stress when starting up on your own. If you would like to speak to someone about any of the above information or any other queries you may have, arrange a callback and a member of the team will be in touch.