Under current UK law, everyone is entitled to £50 tax-free benefits for various reasons that don’t relate to the employee’s performance in their role.
These tax-free benefits are called “trivial benefits” and represent a great opportunity for Employers looking to save on Benefit in Kind tax.
Through HMRC’s Trivial Benefits Allowance, you can gift £50 tax-free to your employees for reasons such as a Wedding Gift, Bereavement, Birthday, or any religious festival.
If a company spending £100,000 stopped giving financial recognition for taxable reasons (e.g. Long Service, Sales targets, values-based recognition) and instead gave rewards say on every employee’s Birthday, then the Employer would typically save 30% of their tax bill, in this scenario saving £30,000 per year.
The value of the gift must be no more than £50
The gift cannot be given through payroll or in cash
The gift can’t be a contractual agreement
The gift can’t be rewarded against performance
If you wish to improve your business start by focusing on your most important asset; your employees.