A Quick Guide to Trivial Benefits
Last years Autumn Statement introduced a statutory exemption which will exempt from income tax and NICs low-value Benefits in Kind (BIKs) which meet certain qualifying conditions, including a £50 limit per individual BIK. Qualifying ‘trivial’ BIKs provided to directors or to members of their families or households, are subject to an annual cap of £300.
What is allowed?
A trivial benefit has to satisfy the following conditions in order to qualify for the new trivial benefits in kind exemption from 2016/17:
Remember, there is a limit on the total trivial benefits exemption of £300 per tax year per director (or office holder) and that any benefits provided to their family or household members are also included within this limit.
Normal employees don’t have this £300 limit but the exemption does apply to family or household members, so if there is a function where partners are invited then each employee’s partner can share the £50 trivial benefit for the particular event.
The exempt trivial benefits will not count towards taxable income or class 1 NIC and need not be reported on the P11D, P9D or P11D(b).
What kind of payments can be included as trivial benefits?
The type of trivial benefits that are allowed include expenses such as:
Some expenses will not be allowed, and HMRC give the following examples of what is not allowed under the exemption:
The change in the rules for trivial benefits does not change the existing rules for social functions which are open to all employees and cost less than £150 per head.
Last years Autumn Statement introduced a statutory exemption which will exempt from income tax and NICs low-value Benefits in Kind (BIKs) which meet certain qualifying conditions, including a £50 limit per individual BIK. Qualifying ‘trivial’ BIKs provided to directors or to members of their families or households, are subject to an annual cap of £300.
What is allowed?
A trivial benefit has to satisfy the following conditions in order to qualify for the new trivial benefits in kind exemption from 2016/17:
- No more than £50 per benefit (or average of £50 if the benefit is provided to a group of employees and it is not possible to work out the exact cost for each individual).
- Not cash or a cash voucher (but gift vouchers e.g. for a shop, are allowed).
- There is no entitlement to the benefit as part of the employee’s contract (including salary sacrifice schemes).
- It is not provided in recognition of a work related service or employment duty.
Remember, there is a limit on the total trivial benefits exemption of £300 per tax year per director (or office holder) and that any benefits provided to their family or household members are also included within this limit.
Normal employees don’t have this £300 limit but the exemption does apply to family or household members, so if there is a function where partners are invited then each employee’s partner can share the £50 trivial benefit for the particular event.
The exempt trivial benefits will not count towards taxable income or class 1 NIC and need not be reported on the P11D, P9D or P11D(b).
What kind of payments can be included as trivial benefits?
The type of trivial benefits that are allowed include expenses such as:
- Taking a group of employees out for a meal to celebrate a birthday.
- Buying each employee a Christmas present.
- Flowers on the birth of a new baby.
- A summer garden party for employees
Some expenses will not be allowed, and HMRC give the following examples of what is not allowed under the exemption:
- Providing a working lunch for employees (because this is related to their employment).
- Gifts, incentives or events related to performance targets or results.
- Gifts, incentives or events in relation to employment services e.g. team-building events.
The change in the rules for trivial benefits does not change the existing rules for social functions which are open to all employees and cost less than £150 per head.