There is nothing trivial about Benefits in Kind

29 March 2016

One of the measures will see the introduction of a long awaited statutory exemption for trivial benefits which will for the first time provide employers with greater certainty on what is, and more importantly what isn’t a BIK, that can be considered Trivial.

Under this exemption, if an employer provides a benefit to their employees, the benefit will be exempt from tax as employment income if all the following conditions are satisfied:

  • The cost of providing the benefit does not exceed £50 - or an average cost per employee where a benefit is provided to a group of employees and it is impracticable to work out the exact cost per person.
  • The benefit is not cash or a cash voucher – although non cash vouchers will be allowed.
  • The employee has no contractual entitlement
  • The benefit is not provided in recognition of particular services performed by the employee as part of their employment duties.

Where the employer is a close company and the benefit is provided to an individual who is a director or other office holder of the company (or member of their family or household) the exemption will be capped at a total cost of £300 per year. This is to be known as the annual exempt amount.

HMRC published draft guidance in February which provides a range of good examples that help to demonstrate how the exemption will be applied.