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Statutory Exemption for Trivial Benefits

17th December 2015

Employers are currently reliant upon an HM Revenue & Customs’ “easement” whereby neither tax nor National Insurance is due on small (often referred to as “trivial”) gifts given to employees. The key to HMRC’s easement is for gifts to be “trivial” in nature and not in recognition of services provided by the employee.

Proposed legislation

The recently published Finance Bill 2016 seeks to put the “easement” on to a statutory footing. From 6 April 2016 employers will be able to provide non-cash gifts with a value of £50 or less to employees without the need to account for either tax or National Insurance.

The exemption will prove invaluable for employers which provide gifts, for example:

  • On an employee marriage;
  • On the birth of a child; or
  • At Christmas.

The exemption will prove invaluable to employers of all sizes.

What will be excluded?

There are circumstances when the exemption will not be available and these are considered below.

The gift must not be in recognition of any duties or services provided by the employee, for example staff awards. The exemption will specifically exclude any cash payments and/or the provision of cash vouchers. The exemption will not be available in respect of retirement gifts. Similarly, the exemption will not apply to long service awards for which a separate exemption for employees with more than 20 years of service is available.

The legislation will include an annual cap of £300 to be applied to directors and other office holders of close companies and members of their families and households who are employees of the company.

Where the terms of the exemption are not met, employers will be required to report any gifts provided to staff on either forms P11D or as part of a PAYE Settlement Agreement.

For further advice regarding trivial benefits, or other employment tax matters, please contact Nick Bustin, Director of Employment Tax, or your usual haysmacintyre contact.

T 020 7969 5578