Have you considered giving your employees or yourself benefits in kind that are tax free, here are some to choose from:
- Pensions – Up to £40k can be paid in to your pension scheme by your employer (2015/16) and you can use carry forward to pay in even more
- Childcare – Up to £55 per week but check the rules to makesure your childcare complies (HMRC Leaflet IR115)
- Mobile Phone – One per employee
- Lunch – Tax Free Lunch Blog
- Cycle Schemes – Cycle to Work Blog
- Fitness – Fitness Blog
- Parties and Gifts – Christmas Blog
- Parking – Parking Blog
- Business Mileage Allowance – 45p for the first 10,000 miles then 25p
- Long Service Award – A bit restrictive as you need 20 years service, the tax free amount is £50 x the number of years
- Eye Tests and Spectacles – The Eye Test must be needed under the Health & Safety at Work Act
- Suggestion Schemes – Suggestion Scheme Blog
- Insurance such and Death in Service and Income Protection – Medical Insurance Blog
- Travel Expenses – Travel Blog
- Working From Home – Working from Home Blog
- Clothing – Tax Allowances
- Trivial Benefits – Trivial Blog
- Training – Training and Salary Sacrifice CPD
- Relocation Costs
- IPad or Laptop – IPad used for Business
- Rent a Room to another employee – Rent a room blog
From the 6th April 2016 a trivial benefits exemption will become law and set at limit on the benefit of £50 per employee per benefit.
There will be an annual cap of £300 for directors and other office holders of close companies and members of their families and households who are employees of the company.
Its designed for seasonal gifts, flu jabs, small gifts, flowers etc.
- It can’t be cash, or cash vouchers.
- The employer must bear the cost (salary exchange won’t work)
- It must not be in recognition of services or part of a contractual agreement
For years the definition of ‘trivial benefit’ has been undetermined and it was a massive grey area but now we have some definite rules to work to.
Its nearly time to prepare your P11D’s, here is a link to the 2014-15 P11D
You’ll need to submit an end-of-year form to HM Revenue and Customs (HMRC) for each employee you’ve provided with expenses or benefits.
The form will either be a P9D or a P11D, depending on the expense or benefit.
You may need to submit form P11D(b) to report the amount of Class 1A National Insurance due on all the expenses and benefits you’ve provided. You should do this if:
- you’ve submitted any P11D forms
- you’ve been sent a P11D(b) form by HMRC
If you don’t submit any P11D forms, you can tell HMRC that you don’t owe Class 1A National Insurance by completing a declaration.
Due by 6th July 2015.
As an employer, you can apply for a dispensation on some expenses and benefits you provide for your employees. This means you won’t need to report them to HM Revenue and Customs or pay tax or National Insurance on them. Here is a link to apply for Dispensations.
There are also Benchmark Scale Rates which can be paid tax free, alternative you can claim the actual costs
||Amount (up to)
|One meal (5 hour) rate
|Two meal (10 hour) rate
|Late evening meal rate
It had been proposed that there will be a new statutory exemption for trivial benefits up to a limit of £50 from from 6 April 2015, this measure is not included in the first Finance Bill of 2015, it has been deferred until after the election.
The £50 tax exemption would have been on items such as birthday and Christmas gifts. The legislation would have also introduced an annual cap of £300 in some circumstances.
So we are stuck with the old rules for now
An employer may provide employees with a seasonal gift, such as a turkey, an ordinary bottle of wine or a box of chocolates at Christmas. All of these gifts can be treated as trivial benefits. . For an employer with a large number of employees the total cost of providing a gift to each employee may be considerable, but where the gift to each employee is a trivial benefit, this principle applies regardless of the total cost to the employer and the number of employees concerned. If a benefit is trivial it should not be included in a PSA (EIM21861).
There are some non taxable benefits you be interested in….
HMRC Helpsheet 207 – Non-taxable payments or benefits for employees
You need to renew if you receive an Annual Declaration form (TC603D or TC603D2) with an Annual Review notice (TC603R).
You don’t need to renew if you only receive an Annual Review notice (TC603R), as your claim will be renewed automatically. However you still need to tell the Tax Credit Office straightaway if:
- you have had any changes in circumstances
- your income is different to what’s shown in the Annual Review notice
- there are mistakes or details missing from the notice
If you’ve been sent an Annual Declaration (TC603D or TC603D2) and don’t renew, the following will happen:
- your payments will stop
- you will have to pay back any overpayment from the previous tax year
- you will also have to pay back any payments you’ve received from the start of the new tax year
- you’ll get a statement from the Tax Credit Office about your tax credits payments
- you will usually have to make a new tax credits claim if you don’t provide the information within 30 days
The HMRC calculator will help you understand whether you are entitled to tax credits and how much you could claim http://taxcredits.hmrc.gov.uk/Qualify/DIQHousehold.aspx
I know that many small business owners claim tax credits because in the early years of the business their income is low.
So don’t forget to renew by 31st July.