What are trivial benefits?

You don’t have to pay tax on a benefit for your employee if all of the following apply:

• The total cost to provide was £50 or less.
• It isn’t cash or a cash voucher.
• It isn’t a reward for their work or performance.
• It isn’t in the terms of their contract.

This is known as a ‘trivial benefit’. You don’t need to pay tax or National Insurance or let HM Revenue & Customs (HMRC) know.

You have to pay tax on any benefits that don’t meet all these criteria.

Salary sacrifice arrangements

If you provide trivial benefits as part of a salary sacrifice arrangement, they won’t be exempt. You’ll need to report on form P11D whichever amount is higher:

• The salary given up.
• How much you paid for the trivial benefits.

Directors of ‘close’ companies

You can’t receive trivial benefits worth more than £300 in a tax year if you’re the director of a ‘close’ company.

A close company is a limited company that’s run by 5 or fewer shareholders.

The form P11D is used to declare any employee expenses or benefits provided within any given tax year. For the tax year ended 5 April 2023, the P11D must be submitted with HM Revenue and Customs no later than 6 July 2023. In addition, employees must be provided with a copy of their P11D no later the 6 July 2023. Any tax due must be paid to HMRC no later than 22nd July 2023 (if paying electronically).

Below is a non-exhaustive list of employee expenses and benefits that should be declared on the P11D:

• Company cars. 
• Director or employee loans > £10K.
• Medical insurance or treatment.
• Gym or health club membership.
• Assets available for an employee's private use.
• Professional fees relating to the completion of personal tax returns.
• Staff entertaining > £150 per head.

Certain business expenses are covered by a HM Revenue and Customs exemption, meaning they don't need to be disclosed on the P11D. These may include:

• Business Travel. 
• Business entertainment expenses.
• Uniform and tools for work.
• Phone bills.

To qualify for an exemption, you must be either:

• Paying a flat rate to your employee as part of their earnings - this must be either a benchmark rate or a special rate approved by HM Revenue & Customs.
• Reimbursing the employee’s actual costs.

You must have a system in place to check payments you make at benchmark or bespoke rates. Note that your employees:

• Cannot check their own expenses.
• Should be instructed to keep proof of their expenses, for example receipts or bills, in case you need to check them.