The trivial benefit exemption is a great way for employers to provide employees with lower cost benefits that are free of tax and National Insurance, and no obligations have to be reported!

A benefit can be classed as trivial if the cost per employee is not more than £50, and an annual cap of £300 per tax year applies when the benefit is provided to an officer of a close company or a member of their family or household.

What are contractual entitlements?

Contractual entitlement is more than just simply including it in a contract of employment. As such, the fact that the contract does not reference trivial benefits is not enough to satisfy the conditions of exemption.

Contractual obligation may come in the following forms:

  • A letter to the main contract document
  • Staff handbooks
  • Redundancy agreements
  • Employer union agreements

What is the legitimate expectation trap?

If an employer provides free lunch every Friday, out of the kindness of their heart, rather than a contractual obligation, then they may create a legitimate expectation. This takes the lunch, in the form of a benefit outside of the trivial benefits exemption.

Varying the nature or time of the lunch, IE to a Tuesday can help you to avoid falling into the legitimate expectation trap.

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Any questions?

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