Trivial Benefits & Staff parties

Trivial Benefits & Staff parties

Trivial benefits

A company may treat its staff to trivial benefit subject to specific rules:

  1. Maximum £50 per benefit (including VAT)
  2. No more than £300 in a tax year (05 April) per director
  3. Must not be in cash
  4. Must not be a reward for work done (staying late, or hitting a sales target) 

 

The easiest way to utilise this is to buy £50 vouchers, such as Amazon or M&S, and gift them for events/times of the year, such as birthdays. 

 

You should use the company bank account to buy them. The gift vouchers are deductible for corporation tax and incur no personal tax, so it is the best of both worlds! If you have two directors in a company, they could take out £600 in tax-free benefits a year via this method.

 

Staff party

A company may have a party of up to £150 per head, including VAT, in a tax year (05 April). HMRC indicate one or two events could be used if you do not want to spend it on a single night out. Remember to use the company card. 

 

While technically, there is no limit on who the ‘heads’ are or how many can come, HMRC still requires the expense to be wholly business. There appears to be scope for spouses at a company party, even if they are not on the payroll or board. HMRC are unlikely to accept individuals who are either not already employees/directors of a company or their spouse. So two directors with their spouses would allow up to 4 x £150 to be spent.

 

The event cost of £150 per head includes the cost of transport and/or overnight accommodation if these are provided to enable employees to attend. This benefit stretches only to company employees and their partners and not to business contacts/clients where the expense should be classed as business entertainment.

 


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