Nearly half of employers using trivial benefit rules for festive gifts
17 December 2018
In our penultimate festive poll, we asked how your employer will process the value of your seasonal gift? Tax-savvy employers lead the way with 48% of relevant respondents ensuring that this generosity falls within the trivial benefit rules.
Prior to April 2016, there was no statutory limit below which benefits would not be taxable and so this subject has been the cause of many a debate between the employer and their adviser and HMRC for many years. The news that HMRC had accepted the recommendation from the Office of Tax Simplification (OTS), in a bid to increase administrative simplicity, was indeed welcome.
For a gift, or token, to be considered a trivial benefit however it must meet certain criteria:
- It must cost £50 or less to provide
- It must not be cash or a voucher that can be exchanged for cash
- It must not be a reward for the work or performance of an employee
- It must not be given as a result of contractual entitlement
Gifts, and not just the ones given at Christmas, are limited only by the imagination of the HR team but increasingly are becoming more imaginative than a turkey or bottle of wine. The final cost to a large employer may be significant, but as long as the criteria are met for each employee, the principle will apply regardless of the final cost.
Be mindful that accurate records which evidence that the criteria have been met must be maintained.
We received 165 responses to the poll which asked ‘How will your employer process the value of your seasonal gift?’ 39% of respondents marked their response as not applicable but of those, where the question did apply, (101) 48% stated that the processing would fall within the trivial benefit rules.
Of the remaining relevant respondents 29% said that their employer used a PAYE Settlement Agreement (PSA), 13% would be payrolling the value and just 8% would be using the P11D reporting route.
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Please do bear in mind that our polls are just a snapshot in time, a one question poll which does limit the responses and does not cater for follow up. However, results can help provide an indication of a trend in a certain area, or where there is further work to do around raising awareness on a particular issue, and also qualifying where further research may be required. |