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.

Year end personal pension planning...

If you're thinking of making a large personal pension contribution before the end of the year, you can take advantage of the pension carry forward rules in order to benefit from any unused allowances from the previous three tax years. 

This is generally the difference between the old £50,000 annual pension allowance and your pension input that year and can be added to your relief for 2015/16. 

Note that the annual pension allowance is £40,000 for 2015/16 and 2016/17.

To avoid losing pension relief brought forward from 2012/13 which lapses 5 April 2016, why not consider making an additional pension payment before 5 April 2016? If your pension input was £24,000 in 2012/13 then there is £26,000 unused relief available to add to your 2015/16 allowance. You would need to make gross pension contributions of at least £66,000 (£40,000 plus £26,000) to avoid losing this relief.

If you have income over £150,000 your annual pension allowance will be reduced by £1 for every £2 over £150,000.

For further information on any topics covered in our blogs, or if you would like to speak to us about our pro-active Accountancy & Tax services, contact Brian or Caroline on 0845 303 1144 for a chat or email info@coopercurtis.co.uk. 

Cooper Curtis Accountants have offices in WarwickshireBirmingham and Manchester

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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.