Commenting on the ministerial statement relating to the Finance Bill published today saying that clauses to introduce a statutory exemption for “trivial benefits in kind” will be deferred to a future Finance Bill, Steve Wade, employment tax director at KPMG in the UK, said:
“Current examples that HMRC accept as ‘trivial’ benefits in kind are small gifts (such as a bouquet 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. 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, today’s 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 a ‘trivial’ benefit in kind. They will need to either stick to or renegotiate these arrangements until the actual statutory value and definition is introduced.
“Employers will need to continue to be careful that small gifts are not considered taxable benefits in kind if they want to avoid the scenario in which a well-meant gesture results in a staff member getting a tax bill. Many employees would be astonished that the gifts could be taxable.
“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 last week’s budget as an anti-avoidance measure on gifts to family members in close companies. The delay will also provide HMRC with additional time to consider their promised guidance on the new legislation.”
Margot Cowhig, KPMG Corporate Communications
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This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.