Tax-free perk before annual leave

It is possible to make small tax-free payments to employees, including directors, and this might be an appropriate time to make a small tax-free bonus in advance of the annual holidays.

Employers and employees don’t have to pay tax on such a benefit 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.

HMRC describes these payments as a ‘trivial benefit’.

You can’t receive trivial benefits worth more than £300 in a tax year if you are the director of a ‘close’ company. A close company is a limited company that’s run by 5 or fewer shareholders.

Planning note

The only exception to the above is if the trivial benefits are made available as part of a formal salary sacrifice arrangement.

Share:

Share on facebook
Share on twitter
Share on pinterest
Share on linkedin

Recently Added News

Running a limited company

Limited companies are owned by shareholders and managed by directors. Very often, especially in the case of smaller companies, the owners and managers (shareholders and

Read More »

Related News

A new government-backed loan scheme

A new Recovery Loan Scheme was launched 6 April 2021, to provide much needed liquidity to businesses affected by COVID lockdown measures. Under the scheme,

Data Protection obligations

Everyone in business that handles personal data must register for data protection purposes with the Information Commissioners Office. Most business will need to pay an

Quick Links