Trivial benefit exemption will come into force from 6 April 2016

09 December 2015

Legislation will be introduced in Finance Bill 2016 to provide a statutory exemption from tax for qualifying trivial benefits in kind costing £50 or less.

At Budget 2014, the Government announced a package of measures to simplify the tax treatment of employee benefits and expenses, helping to reduce employer burdens. This package included a statutory exemption for low value benefits in kind (‘trivial BiKs’). Legislation to exempt from Income Tax trivial BiKs costing £50 or less, where certain conditions are met, was deferred from Finance Act 2015 and has now been included in Finance Bill 2016.

Employers will no longer be required to report such benefits on either form P11D or via PAYE Settlement Agreements (PSAs) at the year end. In response to consultation on draft legislation published in December 2014, an annual cap of £300 will be introduced for directors and other office holders of close companies and members of their families and households who are also employees of the company.

The trivial benefits exemption replaces a concessionary practice, whereby an employer is required to agree with HMRC whether a benefit can be treated as trivial and so not reported to HMRC. A corresponding disregard will be introduced to remove any liability for Class 1 NICs for any qualifying non-cash vouchers provided under the exemption.