NEWS

The New ‘Not so’ Trivial Benefits Exemption

Employers will be aware that various changes have been made from April 2016 to the reporting requirements for employee benefits and expenses.  One significant measure is the introduction of a statutory exemption for trivial benefits.

New legislation included in the Finance Bill 2016 means that an employer can provide trivial benefits to their employee and there will be no taxable benefit implications. 

Before April 2016, this type of benefit was also allowable but had relied on a ‘common sense’ approach by HMRC as there had been no fixed value that was specifically stated.
So how far can you go with the new trivial benefits exemption? The basic rule is that an employer can now provide trivial benefits (eg a bunch of flowers or a box of chocolates) without having to include it on the P11D.

No tax or national insurance will be payable for either employer or employee and the employer will also be entitled to claim income or corporation tax relief on the cost.

HMRC states the benefit is exempt from tax if all the following conditions are satisfied:

•    The cost of providing the benefit does not exceed £50 (or the average cost per employee if a benefit is provided to a group of employees and it is impracticable to work out the exact cost per person)
•    The benefit is not cash or a cash voucher (gift cards are fine, as long as they are not exchangeable for cash)
•    The employee is not entitled to the benefit as part of any contractual obligation (including under salary sacrifice arrangements)
•    The benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services)

Employers of close companies (ie privately owned and under the control of five or fewer people) should note if the benefit is provided to a director or other office holder of the company (or a member of their family or household) the exemption is capped at a total cost of £300 in the tax year.
Morris Crocker has its own inhouse payroll bureau.  Please contact us if you would like further information about this or other payroll concerns.

27/10/2016