Trivial legislation

Minor benefits-in-kind officially exempt

As from April 2016 it will no longer be necessary for employers to have to apply to HMRC to exclude reporting benefits-in-kind (BIK) on the grounds that they are trivial. Finance Bill 2016 will introduce a statutory exemption which will exempt low value benefits from income tax and NIC, where they meet certain qualifying conditions including a £50 limit per individual BIK. Qualifying ‘trivial’ BIKs provided to directors or other office holders of close companies, or to members of their families or households, will be subject to an annual cap of £300.

Currently, employers are required to agree with HMRC whether certain BIKs can be treated as trivial and the government recognise that this is a burdensome process for both employers and HMRC alike, and is also disproportionate to the amounts of tax and NIC due.

There are no set rules for determining the type of BIK that is trivial in nature. According to HMRC’s own guidance, trivial benefits are often, but not always, perishable and/or consumable and they provide a number of examples:

• Provision of tea and coffee to employees in the workplace
• Repairs to employer-provide cycles
• Small gifts to employees, such as flowers, provided it is made in recognition of a particular event, such as an employee’s marriage or birth of a child, and is not part of any reward for services
• Seasonal gifts to employees, such as a turkey, bottle of wine or box of chocolates
• Seasonal flu immunisations for employees. Happy Christmas!!

There are instances where a common sense judgement has to be made to the type and the amount of benefits that are trivial.

The introduction of a statutory exemption will therefore help simplify the existing process, as well as creating certainty and transparency for employers as to the treatment of such BIKs and reduce the administrative costs for all parties.

We did know this was coming as long ago as 2014, when the first announcement was made during that year’s Budget, as part of a package of measures aimed at simplifying the administration of employee BIKs and expenses. This came off the back of a review of employee BIKs and expenses by the Office of Tax Simplification in January of that year.

In June 2014, a consultation document was published, followed by a summary of responses and draft legislation in December of the same year. Although intended for Finance Bill 2015, the legislation was deferred until 2016.