15 Jun 2017
The trivial benefits in kind (BiK) regime came into effect in April 2016. This statutory exemption applies to small non-cash benefits like a bottle of wine or a bouquet of flowers given occasionally to employees or any other benefit in kind classed as 'trivial' that falls within the exemption.
Although the benefit is defined as ‘trivial’, employers should remember that this offers a great opportunity to give small rewards to employees. To qualify, gifts must not be given as a reward for services performed or as part of the employees’ duties. However, gifts to employees on milestone events such as the birth of a child or a marriage or other gestures of goodwill would usually qualify.
The employer also benefits as the trivial benefits do not have to be included in PAYE settlement agreements or disclosed on P11D forms. There is also a matching exemption from Class 1 National Insurance contributions.
The tax exemption applies to trivial BiKs where the BiK:
The rules also allow directors or other office-holders of small companies and their families to benefit, although an annual cap of £300 aplies. This would limit gifts to these individuals to six a year at £50 each. The £300 cap does not apply to other employees. If the £50 limit is exceeded for any gift, the full value of the benefit will be taxable.
This trivial benefits exemption helps simplify the treatment of BiKs whilst at the same time offering a tax efficient way to give small gifts to employees and even to treat directors and their families. Accordingly, it should be viewed as a worthy component of any strategy that examines tax efficient ways for directors to withdraw funds from a small company for their own benefit, and as a way to create goodwill towards their workforce.
If you would like to re-examine your profits extraction strategies we would be delighted to help. Although the use of trivial benefits is limited for directors, as part of a coordinated campaign it is a worthy tax planning addition.
Vada Studios is a very successful music recording facility. The business had outgrown their existing premises, and had a vision to create one of the top residential recording studios in the UK.
A highly successful restaurant, butcher and retail business.
GJA have been the retained accountants for this property investment and development group for over 20 years. Imminently due to dissolve companies.
Proco approached us with an idea of becoming a distributor of a high-end product in the UK, supplying vinyl nationally.
In 2008 Tom Floate left his employer to set up his own business providing website services. Initially forming a partnership with his wife Rachel, they began trading IO Studios from their home office.
Barry the Butcher is a very successful wholesale butchery and retail business.
Grenfell has a broad range of experience and knowledge, working with clients from many different industry sectors. Grenfell is also the senior audit partner in the practice.
Chris works with a diverse profile of owner managed businesses to assist them to grow and retain wealth. Although Chris works with clients from a wide range of sectors, he has particular expertise in property, catering, consultancy and professional services.
Managing Director ACMA
Alex has worked for Grenfell James since 2002 and became a director in 2013. Overseeing our internal operations, he manages the flow of work and ensures we hit our strict deadlines. Alex also manages a portfolio of clients, with expertise in manufacturing and service businesses.
Operational Director MAAT
David has worked for Grenfell James since 2006. He heads up our tax team and is highly experienced with expertise in different industries and sectors.
Tax Director ACCA
Hannah qualified in 2016, having worked for the company since 2009. She acts as a client manager for a range of businesses, with expert knowledge of the equestrian and rural sector. Hannah also manages our payroll team.
Client Manager ACCA
Paul Stanley. A S Contracts Ltd.
Dean. Wootton IT
Andrew Knight. The Howard Arms Ilmington
Mr J McCarthy
Mckechnies independent tea and coffee bar.
Roy Ferguson. The Perfect Cosmetics Company.
NPD Design Consultants Ltd
Regent Square Estates
Proco Coatings & Laminates
© Copyright 2018 Grenfell James Associates
Website designed by IO Studios