April 2015 should have seen the introduction of the Trivial Benefits exemption which actually has a values attached to it. Previously, there was an exemption, but the definition of the word “trivial” was the cost of collecting the tax is more than the tax being collected.
It was agreed that this was extremely confusing and as a result the Office for Tax Simplification (OTS) recommended that the definition of trivial be set at £50 per gift but “with no annual limit”.
It was those words “no annual limit” which gave cause for concern as there were suspicions that unscrupulous employers would abuse those terms and give employees a considerable number of gifts to recognise many special occasions (happy new year, Happy Burn’s Night, Happy Valentine’s Day through to Happy Beaujolais Nouveau and Happy Christmas. As a result, the exemption was “pulled” at the 11th hour.
Well, the exemption is being introduced on Wednesday 6 April with the same value set at £50 gifts but with the restriction that for individuals who are Directors or Other Office Holders of close companies and their families or households the exemption is capped at £300 per annum.
For the benefit to exempt, all of the following conditions must apply
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.Employers can find HMRC’s guidance on trivial benefits here.
