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Government's trivial benefits a secret weapon for employees in cost of living crisis

Creative use of the government's trivial benefits scheme may prove a useful tool in helping employees through the cost of living crisis, according to an accountancy firm Ashton McGill.

The Dundee-based firm has announced it will be giving its team gift cards under the trivial benefits scheme operated by the government.

Under the scheme organisations can give their employees tax- and national insurance-exempt gifts of up to £50 in value, as long as they are not cash (or cash vouchers), are not a reward for work or performance, and are not in the terms of their employment contract. 

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Alasdair McGill, co-founder and managing director of Ashton McGill, said: “Contrary to popular belief, the £50 limit for each employee is per gift rather than per year.

“In theory, firms could utilise the trivial benefits scheme more than once a year if needed, as long as it didn’t become a part of the employee’s regular salary or contract.” Company directors are the exception as it is forbidden to give them gifts amounting to more than £300 in a year.

The scheme can therefore be used as one of many important tools in tackling the cost of living crisis, according to Duncan Brown, principal associate at the Institute for Employment Studies (IES).

"It's a really good, canny idea, [to use] at any time to recognise and appreciate employees in a tax-effective way, and especially at a time of a cost of living crisis when people are feeling stressed and need all the financial help they can get," he told HR magazine.

"However," Brown said, "it is not an alternative to paying people properly, and ideally helping them to live a decent life and build up savings to weather this kind of inflationary storm, which too many low-paying employers have not been doing for the past decade."

He added that many benefits providers and recognition scheme operators offer national insurance-free gift cards in their flexible benefits schemes.

Ashton McGill has resolved to give its employees Scotland Loves Local gift cards, which can be spent in local businesses on everything from food to fuel, clothes or coffee.

McGill added: “The cost of living crisis is on most employers' agendas right now, and utilising the trivial benefits scheme to distribute gift cards to staff is one way that employers can support staff as costs rise. The difference it could make to staff is significant.”

By using local gift cards, he said companies would also be helping to support the communities in which they operate, and thereby acting in accordance with good corporate social responsibility principles.