HR · 3 November 2020

Trivial Benefits: Tax-free ways to thank loyal staff and boost morale

How to take advantage of trivial benefits in 4 steps.
How to take advantage of trivial benefits in 4 steps.

With the challenges of the past few months, margins may be tight for many. 

However staff are arguably more in need of a pat on the back than ever before, and a little investment in this area can go an extremely long way in terms of employee morale, engagement and long-term productivity.

There is an existing legislation from HMRC that means that businesses can reward staff without feeling it in the pocket. Indeed, for rewards worth up to £50, the HMRC Trivial Benefits exemption allows employers to reward their staff without incurring additional costs, to help save on the things that matter most.

At a time when staff are more in need of a pat in the back than ever, it is crucial for businesses to take every chance they can to show how much they appreciate the hard work of their team,” said Gift Card & Voucher Association (GCVA) director general Gail Cohen. “HMRC’s Trivial Benefits exemption is an effective, and often-overlooked platform for businesses to take advantage of, allowing companies to thank their staff without impacting their bottom line.”

With this in mind, Cohen reveals four simple steps detailing how businesses can take advantage of Trivial Benefits to thank their staff.

How to take advantage of trivial benefits in 4 steps.

Select your reward of choice

Firstly, it is important to stress that cash itself is not tax-exempt – a £50 cash reward for employees would still be subject to tax. There are a variety of cash-equivalent rewards available, however gift cards are a perfectly legitimate trivial benefit which fit HMRC’s criteria which are arguably the easiest to give – all the business needs to do is order the gift card either in-store or online.

Furthermore, if a multi-store gift card is selected, employees will have a variety of spending options to choose from, meaning they can select a gift they’d truly treasure.

Select the value of the reward 

This step is simple – simply select a value of £50 or less per employee and neither tax nor national insurance will apply, meaning that the employee – and, by reflection, the employer, does not have to shoulder the extra cost.

Order your rewards

If this reward is a gift card or voucher (either physical or digital), this step is as simple as selecting a value (£50 or less), quantity and entering the relevant payment and delivery details. With certain providers, pre-Christmas orders can be placed up until late December – so even if businesses were to leave their Christmas bonuses until the last minute, staff don’t need to go without and, if the annual Christmas party should need to be cancelled at the last minute, businesses can still thank their staff in other ways.

With gift cards or vouchers, the ordering process is as simple as either buying as many as required in-store – either from the retail store itself or from gift card malls, which can be found in a variety of larger schools such as supermarkets – or online. Companies could also look into setting up digital platforms wherein staff have more control over selecting the reward or benefit they want, and can also store those they don’t want to redeem immediately for later use.

Other non-cash rewards, such as a bottle of fizz, flowers or a staff outing, are also eligible as long as the value does not exceed £50 per employee. If there are any doubts around eligibility, HMRC is able to advise on its Employer Helpline.

“Gift cards are a proven tool for increasing both employee engagement and customer loyalty, spanning both the consumer and corporate spaces to the benefit of all,” Cohen added. “Given that the high street also benefits from businesses recognising their staff in this way, we would urge businesses to put their hand in their pocket and subsequently boost both staff morale and high street footfall.”

Reward your staff

Finally comes the moment of truth – presenting the rewards to staff and thanking them for their hard work. This should always come with a sense of ceremony; bringing the business together for the presentation over a video call can be an effective way to manage this in these socially-distanced times, in order to foster goodwill and build a sense of camaraderie across the team.

Businesses can also post about the reward over social media channels, mention it in the company newsletter (if they have one), or even post to the company blog, which are all fantastic ways to remind staff of the reward and what they did to earn it, while also promoting it throughout the business.

The GCVA is currently campaigning to have the £50 Trivial Benefits exemption limit increased to £500 as part of its #GiftCard500 campaign, encouraging employers across the nation to then use the increased tax-free allowance to thank staff for their hard work and raise morale ahead of months of further COVID-19 uncertainty.

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ABOUT THE EXPERT

Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.

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