30-09-2021
Make the most of tax-free trivial benefits

The trivial benefits in kind (BiK) exemption applies to small non-cash benefits, for example a bottle of wine or a bouquet of flowers, given occasionally to employees.

Although the benefit is defined as ‘trivial’, employers should remember that this can be an efficient way to provide small rewards and incentives to employees. The main requirement is that the gifts are not provided as a reward for services performed or as part of the employees’ duties. However, gifts to employees on milestone events such as the birth of a child or a marriage or other gestures of goodwill would usually qualify.

The employer also benefits as the trivial benefits do not have to be included on PAYE settlement agreements or disclosed on P11D forms. There is also a matching exemption from Class 1A National Insurance contributions. There is no requirement to let HMRC know once the benefit meets the necessary criteria.

The tax exemption applies to trivial BiKs where the BiK:

  • 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 rules also allow directors or other office-holders of close companies and their families to benefit from an annual cap of £300. The £50 limit remains for each gift but could allow for up to £300 of non-cash benefits to be withdrawn per person per year.  The £300 cap doesn’t apply to other employees. If the £50 limit is exceeded for any gift, the total value of the benefit will be taxable.

Source: HM Revenue & Customs | 26-09-2021

Back

Post a Comment

Your email address will not be published. Required fields are marked *

*

  • ABOUT US

    the accountancy practice kent logo

    The Accountancy Practice is a Kent based firm specialising in small and medium sized businesses. We provide a friendly, professional service and regard our smallest client as important as our largest.
  • Latest News

    21-10-2021
    Self-Assessment filing deadlines

    The 2020-21 tax ... read more

    21-10-2021
    Claiming tariff quotas to reduce import duties

    Tariff quotas are a ... read more

    21-10-2021
    Transport restrictions eased

    The government has ... read more

    More news

  • CONTACT US

    The Accountancy Practice
    10 Churchill Square
    Kings Hill
    West Malling
    Kent ME 19 4YU

    01732 897929

    Fax: 01732 897939
    info@theaccountancypracticeltd.co.uk


    Facebook
    Twitter
    Linkedin
  • Why choose us

    By working more closely with you than traditional accountants, The Accountancy Practice is able to gain a deeper understanding of your individual business needs. We are then on hand to support you with day to day issues and provide ongoing financial and taxation expertise. You can think of us as your virtual Financial Director.