Too trivial to cause a tax liability?

A statutory exemption has been introduced for trivial benefits from 6 April 2016. 

The exemption applies, and the benefit is not taxed as employment income, if 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
  • 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)

Where the employer is a close company and the benefit is provided to an individual who is 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.

If any of these conditions is not satisfied then the benefit is taxed in the normal way, subject to any other exemptions or allowable deductions.

The exemption applies equally to benefits provided to the employee or to a member of the employee’s family or household.

Of course, the rules are not straightforward! Further details are available on HM Revenue & Customs – https://www.gov.uk/government/publications/tax-exemption-for-trivial-benefits-in-kind-draft-guidance/tax-exemption-for-trivial-benefits-in-kind-draft-guidance

We are here to help, if you have any questions please contact one of our tax team on the following numbers:

Darlington – 01325 349700

Durham – 0191 3842244

York – 01904 784400