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Draft guidance on the new exemption has been published on GOV.UK.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