You don’t have to pay tax on a benefit for your employee if all of the following apply:
- it cost you £50 or less to provide
- 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 and Customs (HMRC) know.
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.
This means directors could take up to six tax & NI free perks worth £50 (50 x 6 = 300)
Family tax-free benefit
If your spouse or partner is also a director they are entitled to their own trivial benefits exemptions.
Time of benefit
It is when to befit is provided not when the voucher is redeemed by a director or employee.
If 6 vouchers are bought at the same time from the same place, HMRC would challenge this as a single benefit which can be taxable as it exceeds the £50 limit.
Ideally, vouchers should be bought at different times and from online retailers who offer a range of products e.g. Amazon, Tesco, and Argos, etc
Deadline for fiscal year is 5th April 202X