The Not so 'Trivial' Benefits Exemption

Tax-free Trivial Benefits

A little known and underused tax free perk is the trivial benefits exemption.

A benefit provided to an employee is classed as a trivial benefit and therefore tax free for not only them, but a tax deduction for the employer too, provided that;

  1. It is less than £50, if given as a voucher it is non cash transferable,
  2. It is NOT a reward for services,
  3. And, it isn't included in the terms of an employee’s contract.

Examples

Trivial benefits could include, a gift voucher, a bunch of flowers, a meal out for employees under £50 per head.

To avoid the reward for service rule, the benefits could be given for a birthday, or a turkey or bottle of wine at Christmas, the birth of a child or a bereavement.

There is no limit to employees!

HMRC’s legislation does not state how many times per year you can give a trivial benefit to your employees. But be wise! Obviously a £50 gift every working day of the year would ring HMRC's alarm bells so we would advise that any trivial benefits made in the year are made as a gesture rather than a frequent payment.

Does this apply to company directors too?

Yes it does! To limit company directors taking advantage of this tax freebie, HMRC will allow trivial benefits provided to directors up to a value of £300 per year. So that’s a payment up to £50 once every two months. If your spouse is also a director that is another saving of £300 and a potential tax saving of £335 if both higher rate tax payers!

For more information on trivial benefits and other tax saving opportunities, contact Cooper Curtis on 0845 303 1144 or email info@coopercurtis.co.uk

POST BY CAROLINE

POST BY CAROLINE

Please note, all our content is for general guideline only, every case is different and we would recommend speaking to us before taking any action as a result of the content. The content was correct at the time it was published.

Employment Intermediary Reporting

In 2015, employment intermediary reports became compulsory for agencies supplying workers and filed on a quarterly basis.

The workers details and payment details are supplied on a simple excel spreadsheet in a format given by HMRC, each quarter, by the 5th of the following month. If no workers were supplied in a particular quarter, a nil report must still be submitted. 

The main reason HMRC brought in this reporting was to satisfy HMRC that PAYE should not have been operated on their payments and to tackle false self-employment.

Failure to submit these reports or submitting an inaccurate report can run into the £1,000's after a third offence so it is paramount that these are submitted with care. 

You will need to sign up to HMRC's unique online service in order to file these reports.

The intermediary report template can be found on our website under Recruitment resources

For more information on intermediary reporting, please contact us on 0845 303 114 or info@coopercurtis.co.uk 

Post by Caroline

Post by Caroline

Please note, all our content is for general guideline only, every case is different and we would recommend speaking to us before taking any action as a result of the content. The content was correct at the time it was published

How will changes to the VAT Flat Rate Scheme affect your business?

From April 2017, those businesses classed as 'limited cost traders' will be automatically required to use the flat rate percentage of 16.5% when calculating their VAT.

The VAT Flat Rate scheme is available to businesses with turnover of £150,000 per annum or less. Before April, is it calculated as a percentage determined by the type of business performed by the sales figure in that quarter and the balance paid over to HMRC. It provided advantages to those service companies who's overheads were low. 

What's a 'limited cost trader'?

Changes to the scheme will mean a business will be required to check actual spending it's spending on 'goods' each quarter and if spending is either less than £250 in the quarter or less than 2% or its gross sales for that period, then the business will have to use 16.5% as their VAT flat rate percentage.

Goods includes, supplies of gas and electricity and exclude vehicles, fuel, motor expenses, capital goods and food and drink. Rent, telephone and internet are classed as services so are also excluded. 

Conclusion

HMRC have brought in the changes to not only limit the advantages to using the flat rate scheme but also, it is gearing up to HMRC's 'making tax digital' changes next year where quarterly reporting will become mandatory. 

The changes will see more time spent on administration by the business owner on analysing purchases made in the quarter. It would be necessary to see whether it is worth continuing under the scheme and paying 16.5% or deregistering depending on the circumstance.

If you have any concerns regarding changes to the VAT Flat rate scheme, please contact us on 0845 303 1144 or email info@coopercurtis.co.uk.

POST BY CAROLINE

POST BY CAROLINE

Please note, all our content is for general guideline only, every case is different and we would recommend speaking to us before taking any action as a result of the content. The content was correct at the time it was published