Offering employees a small benefit or treat is a method employers use to boost productivity and reward the hard work and commitment of their staff. But, what happens when these small gestures of goodwill start to become unwanted additional tax burdens to the employee? We explore the new trivial benefit tax exemption.
Employers will be delighted to hear it is now possible to reward staff without penalising them. In the Finance Bill 2016, the Trivial Benefit in Kind Exemption was included to ensure small gestures from employers were exempt from tax.
The benefit must not exceed £50 per employee or an average of £50, if the benefit is provided to a group of employees and it is difficult to work out the exact cost for each individual. Should the value of the benefit surpass this, the whole amount then becomes taxable, not just the excess over £50.There are guidelines that must be adhered to, of course, to be exempt. But, the benefit may be kept within the family household providing it does not exceed the limit.
The guidelines also stipulate that the benefit must be directly related to employee welfare rather than for service or performance. And of course, the benefit cannot simply be cash, but it can be a gift card with a nominal value.
The new legislation is a practical step to encourage employers to create a vibrant and positive environment without employees having to burden the tax implications. For a detailed breakdown of what satisfies the Trivial Benefit in Kind Exemption guidelines please click here.
If you would like more information on how the Trivial Benefit in Kind Exemption can benefit you or your business, then please contact us here.