Is tax due on small benefits in kind?

Trivial Benefits

As the deadline for reporting taxable benefits has once again come and gone it’s been a good time to reflect on what types of benefits our clients have been providing to their employees.

For those not aware, when employers provide benefits to employees, for example company car or medical insurance, they have to be reported to HMRC with Tax and National Insurance being payable as a result. However, HMRC previously simplified the rules to remove some of the administrative burden for employers, meaning certain low-cost benefits do not have to be reported; these are known as Trivial Benefits.

So, what does this mean for business owners – it’s an opportunity to provide employees (including directors) with one off benefits that do not have to be reported. Where a company has a sole director and no other employees, qualifying benefits can be paid to them in the same way.

We’ve noticed that many of our clients are not taking advantage of the exemption so thought we’d send a reminder of what is covered.

Conditions relating to the benefit provided  

  • it cost £50 or less to provide
  • it isn’t cash or a cash voucher
  • it isn’t a reward for their work or performance
  • it isn’t in the terms of their contract

Examples – gift cards (providing not exchangeable for cash), bottles of wine, hampers, meals, flowers and so on.

Warning – be careful not to spend more than the £50 limit, otherwise the entire amount may have to be reported to HMRC.

Limits – directors of close companies can’t receive trivial benefits worth more than £300 in a single tax year.

Here’s the link to HMRC’s guidance –

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