Make the most of tax-free trivial benefits

Date

Posted by

Make the most of tax-free trivial benefits
Rod Love

Share the article

Share on facebook
Share on twitter
Share on linkedin

Posted by

Make the most of tax-free trivial benefits
Rod Love

Share the article

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

Make the most of tax-free trivial benefits

The trivial benefits in kind (BiK) exemption applies to small non-cash benefits, for example a bottle of wine or a bouquet of flowers, given occasionally to employees.

Although the benefit is defined as ‘trivial’, employers should remember that this can be an efficient way to provide small rewards and incentives to employees. The main requirement is that the gifts are not provided as a reward for services performed or as part of the employees’ duties. However, gifts to employees on milestone events such as the birth of a child or a marriage or other gestures of goodwill would usually qualify.

The employer also benefits as the trivial benefits do not have to be included on PAYE settlement agreements or disclosed on P11D forms. There is also a matching exemption from Class 1A National Insurance contributions. There is no requirement to let HMRC know once the benefit meets the necessary criteria.

The tax exemption applies to trivial BiKs where the BiK:

  • is not cash or a cash-voucher; and
  • costs £50 or less; and
  • is not provided as part of a salary sacrifice or other contractual arrangement; and
  • is not provided in recognition of services performed by the employee as part of their employment, or in anticipation of such services.

The rules also allow directors or other office-holders of close companies and their families to benefit from an annual cap of £300. The £50 limit remains for each gift but could allow for up to £300 of non-cash benefits to be withdrawn per person per year.  The £300 cap doesn’t apply to other employees. If the £50 limit is exceeded for any gift, the total value of the benefit will be taxable.

Thinking of getting your bookkeeping and accounts outsourced to free up time? Why not give us a call today and see how we can help you.

Source: HM Revenue & Customs Mon, 27 Sep 2021 00:00:00 +0100

More articles

Autumn Budget 2021 – Alcohol and Tobacco Duty
Autumn Budget 2021 - Alcohol and Tobacco Duty
October 28, 2021
As part of the Budget measures the Chancellor announced, to a big cheer, that the planned duty rates on
Autumn Budget 2021 – Creative industry tax reliefs
Autumn Budget 2021 - Creative industry tax reliefs
October 28, 2021
The sunset clause for the Museum and Galleries Exhibition Tax Relief (MGETR) was supposed to come into
Autumn Budget 2021 – Dividend tax rates
Autumn Budget 2021 – Dividend tax rates
October 28, 2021
As announced on 7 September 2021, the 1.25% increase in NIC contributions from April 2022 will be