CIPP Survey Employee Benefits and Expenses ? Trivial Benefits exemption

24 July 2014

The CIPP Policy team have published a survey on the recently published consultation by HMRC on the subject of Employee Benefits and Expenses – Trivial Benefits exemption. This survey is due to close on 18 August.

You will be aware that the Office of Tax Simplification has carried out a significant amount of research on the subject of Employee Benefits in Kind (BiKs) and Expenses and in response to the publication of the OTS Review of employee benefits and expenses: second report in January 2014, the government, at Budget 2014, announced that they would be consulting on a core package of four measures, with a view to introducing legislation in Finance Bill 2015.

The core package consists of the following changes:

  • Abolishing the threshold for the taxation of BiKs for employees who earn less than £8,500 a year (‘lower paid’ employments), with action to mitigate the effects on any vulnerable groups disadvantaged by the reforms;
  • Introducing a statutory exemption for trivial benefits;
  • Introducing a system of voluntary Payrolling for BiKs; and,
  • Replacing the expenses dispensation regime with an exemption for paid and reimbursed expenses.

Each change is being consulted on separately and the CIPP Policy team will be producing a separate survey for each to gather views, experiences and suggestions, which will form the basis of a formal response to each subject of change.

The concept of a trivial benefit is not new. However it currently requires the employer to apply to HMRC for agreement to exclude certain BiKs on the basis that they are trivial.

This consultation looks to seek views on defining what would be considered a 'trivial' benefit and how a statutory exemption should be structured. Trivial Benefits will not include vouchers and would not be provided on a continual or regular basis.

The 2011/12 tax year saw some 500,000 P11Ds being completed by employers providing Benefits in Kind with a total cost of £100 or less, and with an estimated cost of £6.50 for HMRC to process each P11D it would appear that in many cases government is processing P11ds that achieve less for the Exchequer in tax and NICs collected than they cost to administer. There is therefore significant reason to bring improvements to this process.

Your help in completing this survey is enormous and we thank you in advance. We would recommend that you have the Consultation Paper to hand, whilst the survey aims to be straightforward to complete, the consultation paper does contain examples that would be useful when you are called upon to express a view.

Thank you for your assistance with this survey and your help in designing this future statutory exemption.