Tax or National Insurance is not due to the cost of an employer-provided benefit providing the exemption for trivial benefits apply. However, just because the value of the benefit is below £50 it does not automatically mean the benefit is trivial as certain conditions apply.
ITEPA section 323A inserted by Finance Act 2016 section 13(2) with effect for the tax year 2016-17 and subsequent years, discusses the conditions that must apply before the employer-provided benefit applies.
Condition A is that the benefit is not cash or a cash voucher within the meaning of ITEPA section 75 – meaning of cash voucher ;
(1) In this Chapter “cash voucher” means a voucher, stamp or similar document capable of being exchanged for a sum of money which is—
(a) greater than,
(b) equal to, or
(c) not substantially less than,
the expense incurred by the person at whose cost the voucher, stamp or similar document is provided.
(2) For the purposes of subsection (1) it does not matter whether the document—
(a) is also capable of being exchanged for goods or services;
(b) is capable of being exchanged singly or together with other vouchers, stamps, or documents;
(c) is capable of being exchanged immediately or only after a time.
Condition B –the cost of the benefit does not exceed £50.
Condition C – that the benefit is not provided under a salary sacrifice arrangement or any other contractual obligation.
Condition D – that the benefit is not provided in recognition of services performed by the employee or in anticipation of such service
Finally, Condition E –
(a) the benefit-cost of the benefit provided to the employee, or
(b) in a case where the benefit is provided to a member of the employee’s family or household who is not an employee of the employer, the amount of the benefit-cost allocated to the employee in accordance with ITEPA section 323B(4),
Which means, there is no annual limit unless they are a family member of a Director of a close company – then the annual limit is £300. ITEPA section 323B (2)
As per HMRC Guidance, 480 (2019) Expenses and Benefits – If the conditions are not met then normal rules surrounding the treatment of benefits apply – ITEPA section 201 (2b) unless the benefit is subject to an exemption or an allowable deduction and this exemption also applies to an employee’s family member. ITEPA section 210 SI No 2080 2000).
Finally to all our clients, have a wonderful Christmas break and wishing you all a happy and successful 2020.
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