Trivial Benefits Exemption from April 2016

In February, draft guidance was published on a new exemption for low value benefits in kind (‘trivial BiKs’) to be included in the Employment Income Manual (EIM). The draft legislation for exemption for trivial benefits in kind is to be included in Finance Bill 2016 (FB16).

This means employers will no longer need to report such benefits on either form P11D or via PAYE Settlement Agreements (PSAs) at the year end. It replaces a concessionary practice, whereby an employer was required to agree with HMRC whether a benefit can be treated as trivial and so not reported to HMRC.

The conditions that have to be met for the benefits exemption to apply are:

• The cost of providing the benefit (including VAT) does not exceed £50. One variation is that this could be the average cost of supplying the benefit to a group of employees is not over £50 (including VAT).
• The benefit is not cash or a ‘cash voucher’.
• No contractual entitlement exists for the trivial benefit, including provisions under salary sacrifice.
• The trivial benefit is not offered in recognition (or reward) for services past or present.
• The trivial benefit exemption is subject to an annual tax year cap of £300 where the employer is a close company and the employee is a person who is a director or other office-holder of the employer, or a member of the family or household of such a person.

This is a new exemption and doesn’t really have a precise definition, but things like flowers, gifts, or birthday presents should be covered. However, 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. i.e., if the present cost £51, the total amount is subject to tax and NIC.

There are a couple of useful links on the GOV.UK web site:

• Technical Note: Tax exemption for trivial benefits in kind
• Tax exemption for trivial benefits in kind: draft guidance