A number of welcome changes to the taxation of benefits on employees and directors come into effect from 6 April 2016.
This is thanks largely to the work of the Office of Tax Simplification. One change in particular – a new statutory exemption for ‘trivial benefits’ – will provide much more certainty on the taxation of benefit.
In practice HMRC have accepted that non-cash trivial benefits that are more related to staff welfare rather than being a reward for services, did not have to be reported on form P11D. But, under tax law, any small benefit could have been taxable.
With effect from 6 April 2016 there will be a statutory exemption for certain non-cash benefits up to £50. An annual cap of £300 will apply to some people – office holders (e.g. directors) of close companies (typically family companies) and employees who are family members of those office holders.
Those affected by this cap will be able to receive a maximum of £300 worth of trivial benefits each year exempt from tax. So trivial benefits are not so trivial.