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21/04/2015

Critical Updates, Issue 70, April 2015

£50 exemption limit

Don't fall foul of the tax rules around trivial benefits in kind: the £50 exemption limit has been dropped from Finance Bill 2015.

A statutory exemption for trivial benefits in kind was expected to be included in Finance Bill 2015, which was published on 25 March 2015.

You will need to be careful to ensure that any small gifts you give to staff continue to meet the current, relatively informal and imprecise definition.

A ministerial statement said this provision would now be postponed until a future Finance Bill. The statement noted that 'a number of clauses which had been intended for Finance Bill 2015 have been deferred as a result of discussions with the Opposition in the context of the end of Parliament wash up process.'

'The Government intends that measures deferred to a future bill will be legislated at the earliest opportunity in the new Parliament', it added.

Current examples that HMRC accept as 'trivial' benefits in kind are small gifts (such as bouquets of flowers) given to an employee to celebrate a personal event, such as the birth of a child, or small items such as a box of chocolates given to an employee for Christmas.

Employers need to maintain the standards they are currently using. We had been expecting this Finance Bill to include measures to introduce a statutory exemption for trivial benefits in kind costing less than £50 from 6 April 2015. However, the ministerial statement makes clear that these proposals have been deferred. What this means is that employers will need to be careful to ensure that any small gifts they give to staff continue to meet the current, relatively informal and imprecise definition.

Some employers may already have agreements in place with HMRC as to the maximum value of trivial benefits in kind. They will need to either stick to or renegotiate these arrangements until the actual statutory value and definition is introduced.

As this was a relatively uncontroversial and easy to legislate proposal, it is surprising that it has been delayed. A possible additional reason for the delay may be the £300 cap announced in the recent budget as an anti-avoidance measure on gifts to family members in close companies.

 

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