Category Archives: Employers

Trivial Benefits in Kind


Here is an overview of the new Trivial Benefits in Kind rules.

From 6 April 2016 a new exemption removes liability to income tax for low value Benefits in Kind (‘trivial BiKs’). This new exemption is being legislated as part of Finance Bill 2016 (FB16) and is subject to Parliamentary approval. The previous administrative practice where employers could agree with HMRC that certain BiKs could be treated as trivial and did not need to be returned to HMRC at the end of the tax year no longer applies.

Draft guidance on the new exemption has been published on GOV.UK. This guidance will be incorporated in HMRC’s Employment Income Manual later in the year after FB16 receives Royal Assent.

General conditions

To qualify as a ‘trivial BiK’ conditions A-D must be met:

 

Condition A – the BiK must not be cash or a cash-voucher;

 

Condition B – the BiK must cost £50 or less;

 

Condition C – the BiK must not be provided as part of a salary sacrifice or other contractual arrangement; and

 

Condition D – the BiK must not be provided in recognition of services performed by the employee as part of their employment, or in anticipation of such services.

 

There is no limit to the number of trivial BiKs that can be provided to an employee in a tax year where all conditions are met, unless Condition E applies (see below).

 
Close companies

 
Condition E applies an annual £300 cap where a trivial BiK (that meets conditions A to D) is provided by an employer that is a close company to an employee who is a:

 

  • director or other office-holder of the close company, or

 

  • member of the family or household of a director or other office-holder of the close company.

 

If you have any queries regarding the new Trivial Benefits in Kind Rules or any other employment matter, do not hesitate to contact us.


EMPLOYERS UPDATE


Paul Southward gives an Employers Update summary.

Save Employer’s NIC when employing apprentices

From 6 April 2016, if you employ an apprentice you may not need to pay employers Class 1 National Insurance contributions on their earnings below £827 per week (£43,000 a year).

The apprentice must be under 25 years old and following an approved UK government statutory apprenticeship framework.  (Frameworks can differ across England, Scotland and Wales).

If you have apprentice(s) that meet the requirement you will need to obtain appropriate evidence to be able to apply for the relief.

Employees will continue to pay the standard rate of Class 1 NICs through their salary, they will not see any reduction in their payments, as it is the employers who will benefit from this change.

Get ready for the new tax year

The new tax year commences on 6 April 2016, so what should employers be doing to get ready?

Here are a few pointers:-

The basic personal allowance is increased to £11,000 and the basic rate band limit rises to £32,000.  The starting point for PAYE tax will be £212 per week (£917 per month).  The new emergency PAYE tax code is 1100L for all employees.

For each employee you employ on 6 April you will need to:

* prepare a payroll record
* identify the correct tax code to use in the new year
* enter the correct tax code on the payroll record

HMRC should issue new tax codes where necessary.  If you do not receive a new tax code for an employee where you were expecting one, you should contact HMRC.

Further guidance for employers can be obtained from HMRC.

Farewell to Dispensations

From 6 April 2016 dispensations for P11D’s will be obsolete.  New legislation provides an exemption from tax for business expenses incurred by employees, provided that they are tax deductible.

Dispensations for bespoke benefits and expenses will be covered by a new HMRC approval notice, and employers will need to provide sample evidence to support the level of allowance requested.  Applications should be made as soon as possible as the use of the approved amounts cannot be backdated.

Employers will need to put in place robust and verifiable checking systems to validate all expenses payments.

Contact Paul if you have any queries.


Employers – avoid these common errors when completing forms P11D


If employer’s can avoid these common errors when completing forms P11D they can avoid delays, additional work and the increased chance of a tax compliance visit.

  • Submitting a duplicate P11D in addition to an electronic version;
  • Using a paper form for the wrong tax year;
  • Not ticking the ‘director’ box when applicable;
  • Not including a description or abbreviation for sections A (assets transferred), B (payments made on behalf of employee), L (assets placed at the employee’s disposal), M (other items) or N (expenses payments made to, or on behalf of, the employee);
  • Leaving the ‘cash equivalent’ box empty where you’ve entered a figure in the corresponding ‘cost to you’ box of a section;
  • Not advising HMRC that a “Nil” P11D is due;
  • Where a benefit has been provided for business and private use, report the full gross value rather than only the private-use amount
  • Not completing the fuel benefit box/field where applicable;
  • •Incorrectly completing the ‘from’ and ‘to’ dates in the ‘Dates car was available’ boxes. E.g. If a car was available in the previous tax year, then the “from” box should not be completed. Where the car is available after the end of the tax year then the “to” box should not be completed

If you need help or guidance with your PAYE benefits and expenses reporting, contact us.