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Employers’ newsletter - Trivial benefits exemption – problems and pitfalls

The tax exemption introduced for trivial benefits offers a valuable tax relief, but brings with it a fresh set of potential pitfalls for employers. Our last Employer Newsletter outlined the conditions for this exemption. Some of the main difficulties being encountered by employers include:

Record keeping: if you do not have records of the benefits provided that detail who has received which benefit and how much it cost per employee then you will be unable to verify that the exemption applies and you will have to treat it as taxable.
Monitoring directors’ benefits: directors of close companies can only receive a maximum of £300 worth of trivial benefits each year. A close company is essentially one controlled by five or fewer shareholders or any number of director-shareholders, but if you are uncertain as to whether this applies to your company please contact us for advice.
Contractual benefits: any benefits that are written into your employment policies or contracts, or guaranteed elsewhere cannot benefit from this relief.
Rewards for work: the trivial benefits exemption is intended to cover staff welfare and goodwill costs only and does not apply to anything that is a reward for work, such as performance rewards or leaving parties. Any such item will be taxable regardless of whether the cost is less than £50 or not.
Working lunches: if staff are required to work through their lunch but are provided with a meal in exchange this is considered to be a reward for work and therefore ineligible for the trivial benefits exemption.
Overlap with other reliefs: there may already be another exemption available for the type of expenditure you are incurring. Some of these are more generous, for instance, there is a £150 limit on the exemption for annual events.

If you require further advice on trivial benefits, please contact me.



Date: 27th March, 2019
Author: Cathy Corns


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