Trivial Benefit: any rule to prevent *any* small expense upto £50 being tax-exempt?

[mickael28]

I've seen a number of posts about Trivial Benefits but they seem to be talking more about the possibility of using these benefits, not which kind of benefits are included.

HMRC guidelines seem quite generic:

Tax on trivial benefits
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

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.

I read somewhere that it won't qualify if it's a regular expense (like gym memberships), but other than that, wouldn't any small purchase qualify under the criteria above? eg, any purchase online or in physical shop within the limits for clothes or books for personal use, entertainment (like buying a DVD player, or sound-system, headphones, ...), even ebay purchases; any kind of e-voucher (supermarket, amazon, toy shops, etc), even just going out for a movie and/or food seems to fit within the guidelines?

Is there any rule that prevents this kind of small purchases to be used as the tax-exempt Trivial Benefit?

[Lance]

Is the benefit wholly and exclusively for business purposes? If not then don’t bother. It’s not worth it.
Stick to your staff party.

[mickael28]

Is the benefit wholly and exclusively for business purposes? If not then don’t bother. It’s not worth it.
Stick to your staff party.

I read a bunch of explanations from different accountant websites or even my own accountant, and none of them mentioned anything about those expenses needed to be 'whole and exclusively' for business purposes,eg:

Providing it’s not cash, the gift itself could be anything, providing the cost is below £50 per head.

For example; store gift cards, flowers, chocolates, wine, hampers or even taking staff out for a meal.

Trivial benefits in kind - Accountants for Contractors, freelancers and small business | accountsnet

HMRC has provided a number of example scenarios where this exemption can be used to mitigate tax liabilities.
Scenario 3: Director Benefits

As a director you are provided with 3 bottles of wine that cost £30, £40 and £50 respectively in a single tax year. The total cost of the benefits is £120. The total cost does not exceed the annual exempt amount of £300 and all of the benefits can be covered by the exemption.

Following their own rules, it seems as long as it's not related to cash or a regular expense, anything would be allowed even if it's not remotely required for the business as such?

[MrButton]

From what I have read previously I think it’s allowable.

But. The time you’ve just spent researching it is probably worth more than the amount of tax you’d be saving therefore not worth the hassle imo.

I always think for expenses could I stand up in court and defend an expense with a straight face. I wouldn’t be happy saying “I bought myself a DVD player because there is a trivial benefit rule”. But that’s just my opinion.

[mickael28]

From what I have read previously I think it’s allowable.

But. The time you’ve just spent researching it is probably worth more than the amount of tax you’d be saving therefore not worth the hassle imo.

I always think for expenses could I stand up in court and defend an expense with a straight face. I wouldn’t be happy saying “I bought myself a DVD player because there is a trivial benefit rule”. But that’s just my opinion.

It didn't take long, in fact, a lot of times I do research just to know how things work rather than for any financial benefit as such. At the moment, I would defend such expenses with a straight face and be happy with it. I wouldn't be happy if it's totally allowed and I'm not using it though, which is what I have done quite a lot of times up until recently.

I think if I don't find a conclusive rule against it, I'll just use those limits and see if anything ever happens.

[WordIsBond]

Is the benefit wholly and exclusively for business purposes? If not then don’t bother. It’s not worth it.
Stick to your staff party.

Is a Christmas turkey or flu jab or a bottle of wine wholly and exclusively for business purposes? Because they are specifically allowed.

Why is it not worth it? If he's going to get a flu jab anyway, why not pay with the company card? Same thing with the turkey. Or, the bottle of wine.

Is it worth it? Well, if you can do £300 / year, and it is stuff you were going to buy for yourself anyway, then why not? You save Corporation Tax plus dividend tax on it. So, around £75 savings, more if you are higher rate.

I admit, I've never got close to £300. I certainly do the flu jab and the turkey every year. Do the same for my other half, too. We eat a lot of turkey on the company during December and January. A couple other small things through the year.

Ask yourself, is this the kind of thing a company might just decide to give their employees sometime? If so, it's probably no problem. If you need a new wheelbarrow from B&Q, that probably isn't going to fly. Box of chocolates, bottle of wine, flowers, that kind of stuff, sure.

[TheCyclingProgrammer]

Is the benefit wholly and exclusively for business purposes? If not then don’t bother. It’s not worth it.
Stick to your staff party.

A benefit is wholly and exclusively for business purposes by definition. It’s a form of employee or director remuneration. Just the same as your salary.

A benefit doesn’t need to be wholly, exclusively and necessarily for business purposes because it’s a benefit. That’s the whole point.

To answer OP, yes a trivial benefit can be ANYTHING so long as the rules you outlined in your original post are adhered to. These rules were introduced to remove any ambiguity as to what is or isn’t “trivial”.

Previously the definition of trivial was loosely defined and subject to challenge by a tax inspector. Now it’s unambiguous and largely defined by value subject to an annual cap to avoid abuse. So knock yourself out.

Which reminds me, I really ought to be taking advantage of this rule myself!

[barrydidit]

Can't believe this thread comes 2 days after mothers day

[l35kee]

I wouldn't necessary pay for a gym membership with it. But stick to more one off items. You can also include gift cards. Amazon gift cards are pretty good to show your employees you appreciate them.

[malvolio]

The key word there is "employees". You aren't one. Therefore...