London: +44 (0)20 7236 2601
St Albans: +44 (0)1727 869141
Rickmansworth: +44 (0) 1923 771010
Milton Keynes: +44 (0)1908 605552

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

SHARE THIS

Articles from this Author

Contact Business Service Partners

Choose from the drop down menu below to select a Partner to contact.

Tweet

Mercer & Hole partner, Andy Turner gives his views on ‘Audit of the future’ bit.ly/2IfWuz5 #Audittwitter.com/i/web/status/1…

Our #MiltonKeynes team turned green today to support @mkhcharity fundraising appeal for a new cancer centre. Green… twitter.com/i/web/status/1…

Follow

LinkedIn

For the latest Mercer & Hole news, visit our LinkedIn page mercer-&-hole

Click here to follow us on LinkedIn