Trivial Benefits are tax free! 1

Businessman looking at a small present with a magnifying glass

At last!

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.

  1. It can’t be cash, or cash vouchers.
  2. The employer must bear the cost (salary exchange won’t work)
  3. 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.

Steve@bicknells.net

Trivial Benefits £50 exemption deferred Reply

Businessman looking at a small present with a magnifying glass

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).

http://www.hmrc.gov.uk/manuals/eimanual/EIM21863.htm

There are some non taxable benefits you be interested in….

HMRC Helpsheet 207 – Non-taxable payments or benefits for employees

http://www.hmrc.gov.uk/helpsheets/hs207.pdf

steve@bicknells.net