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Draft guidance on the new exemption has been published on GOV.UK.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.
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).
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 – 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.