With the new UK tax year starting on 6th April 2025, significant changes will be introduced to employer National Insurance Contributions (NICs). The NIC rate for employers will increase from 13.8% to 15%.
Given these changes, now is the ideal time for employers to plan cost-effective ways to reward their employees. One smart approach is to offer trivial benefits – small, non-cash perks that qualify for tax-free treatment.
In this article, we will break down what trivial benefits are, their conditions, and how they can help businesses and employees save on taxes while fostering a positive work culture. We will also include illustrative tables showing potential savings, especially considering recent increases in employer National Insurance (NI) costs.
What are trivial benefits?
Trivial benefits are small gifts or perks provided by employers that meet the following HMRC conditions:
✅ Each benefit costs £50 or less (including VAT).
✅ It is not given as a reward for work or performance.
✅ It is not part of an employee’s contract.
✅ It is not provided as cash or a cash voucher (but a gift card qualifies!).
By following these conditions, employers can provide tax-free gifts to their employees, making it a cost-effective way to show appreciation. One of the easiest ways to provide a trivial benefit is through Ovation Incentives’ Digital Select Card, which allows employees to choose their preferred gift voucher, ensuring they receive something they truly value.
How employers and employees benefit from trivial benefits
Trivial benefits offer a win-win for both employers and employees. Let’s look at how each party benefits:
For employers
✔ Tax deductible – the cost of trivial benefits is deductible from taxable profits.
✔ No National Insurance Contributions (NICs) – unlike bonuses, no employer’s NICs (15%) are payable.
✔ Boosts employee satisfaction – a cost-effective way to increase engagement and motivation.
For employees
✔ 100% tax-free – no Income Tax or NICs deducted.
✔ Better than a bonus – a £50 trivial benefit is worth more than a £50 cash bonus (which would be taxed!).
✔ Encourages positive workplace culture – small, thoughtful perks improve morale.
Trivial benefits vs. bonuses – a cost comparison
To highlight the tax savings, let’s compare a £50 trivial benefit with a £50 cash bonus.
Table 1: Cost of a £50 reward (Trivial Benefit vs. Bonus)
➡ Employers save £7.50 per employee while employees get the full £50 value rather than just £36 after deductions!
How many trivial benefits can you give?
Each employee can receive trivial benefits worth up to £300 per year. Each individual benefit or gift must not cost more than £50.
Examples of trivial benefits in practice
Trivial benefits are flexible and can be tailored to your company culture. Some popular examples include:
🎁 Gift cards – Amazon, Netflix, Coffee Vouchers, etc.
☕ Coffee shop vouchers – a £50 voucher for regular treats.
🍕 Meal treats – paying for team lunches or snacks.
🎟️ Cinema tickets – surprise employees with a night out.
🎂 Birthday gifts – a small token of appreciation.
Why you should take advantage of trivial benefits this financial Year
With the new tax year starting on 6th April, now is the perfect time to incorporate trivial benefits into your employee rewards strategy. Since these benefits are 100% tax-free, they’re a great way to show appreciation without increasing tax liabilities or facing rising employer NI costs.
By planning ahead, employers can spread out tax-free perks over the year, ensuring consistent employee engagement while optimizing tax savings.
Final thoughts
Trivial benefits offer an easy and cost-effective way to incentivise employees while taking advantage of tax-free perks. By choosing the right non-cash gifts (like gift cards or e-codes), businesses can save on taxes and employer NI contributions while keeping their employees happy.
Our Digital Select Card is a perfect way to reward employees with a trivial benefit. It allows them to choose a gift voucher that matters most to them, giving them the flexibility to select from a wide range of retailers. This ensures that every employee receives a reward that is personally meaningful, increasing satisfaction and engagement.
Key Takeaways:
✅ Trivial benefits are tax-free if they meet the £50 limit and other conditions.
✅ Employers save on NICs and corporate tax, while employees keep the full reward.
✅ You can use trivial benefits multiple times per year, except for directors of close companies (£300 annual limit).
✅ The new tax year from 6th April is the perfect time to implement these benefits in your rewards strategy.
Want to reward your employees in a tax-efficient way? Explore our range of gift vouchers and Ovation Incentives' Digital Select Card, which qualifies as a trivial benefit and allows employees to pick a reward that suits them best! Get in touch with us today!