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Limitations of trivial benefit claims

Source: HM Revenue & Customs | 03/10/18

Under HMRC’s rules, there is no tax to pay on trivial benefits in kind (BiK) provided to employees where all of the following apply:

  • the benefit is not cash or a cash-voucher; and
  • costs £50 or less; and
  • is not provided as part of a salary sacrifice or other contractual arrangement; and
  • is not provided in recognition of services performed by the employee as part of their employment, or in anticipation of such services.

The tax-free exemption applies to small non-cash benefits like a bottle of wine or a bouquet of flowers given occasionally to employees, or any other BiK classed as 'trivial' that falls within the exemption. The rules provide an excellent opportunity to give small rewards and incentives to employees without any further tax implications. 

However, there are limits to the definition: a trivial benefit. For example, gifts that are provided as a reward for services performed or as part of the employees’ duties do not qualify for the exemption. However, small gifts to employees on milestone events such as the birth of a child or a marriage or other gestures of goodwill will usually qualify.

There is also £300 annual cap each tax year for directors or other office-holders of close companies and their families.

A close company is a limited company that’s run by 5 or fewer shareholders.

The £50 limit remains for each gift but there is an overall cap of £300 for non-cash benefits to be withdrawn per person per year. The £300 cap does not apply to employees. If the £50 limit is exceeded for any gift, the total value of the benefit will be taxable.

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Some accountancy websites also provide pages and pages of tax information, helpsheets, etc. We prefer to give clients personally tailored advice. So, if you want details of tax rates and allowances just go to the HMRC website on which you should find what you’re looking for. If you need more individual advice please contact us.

Below are links to websites you may find of interest, but as we like to support our local community and clients, we have included links to websites that may be of interest:

HMRC

FT

BBC

VEALE WASBROUGH VIZARDS

CESP

PRACTICE INDEX

SIMCOMM ACADEMY

More Local:

FOOTPLATE EXPERIENCE

ANGLEBURY PRESS

OFFCAMBER.CO.UK

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Sandisons is the trading name of Sandisons Limited. Registered office: Badger House, Salisbury Road, Blandford Forum, Dorset DT11 7QD.  Co. Reg. No. 05068291

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