Record trivial benefits

This article explains what trivial benefits are and how to record them in FreeAgent.

Trivial benefits are low-value, non-cash gifts or perks provided to employees that are exempt from tax. You don’t have to pay tax or National Insurance on a benefit for your employee if all of the following apply:

• 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

If a benefit doesn’t meet all the criteria above, you’ll need to pay tax on it. If you’re unsure whether a benefit counts as a trivial benefit or not, please speak to your accountant or call HMRC's employer helpline.

As an employer, you don’t have to tell HMRC about trivial benefits unless you provide them as part of a salary sacrifice arrangement. In this scenario, you’ll need to report them on form P11D, reporting whichever is the higher amount of:

• the salary given up
• how much you paid for the trivial benefits

Record trivial benefits in FreeAgent

If you don’t need to report trivial benefits to HMRC on form P11D, they can be entered as a normal cost in your business accounts.

You can set up a separate category in FreeAgent for these if you wish. We would suggest using an Admin Expense category, as Cost of Sales categories are usually related to the cost of specific sales related activities.

You can then explain the purchase of these items as a ‘Payment’ to the category you have created.

We would recommend you check this with your accountant or bookkeeper who’ll be able to advise you more based on your specific circumstances. We also have a guide on expenses which may be useful.