If HMRC aren’t clear about the Trivial Benefits rules, who is?
A host at an HMRC webinar was explaining the tax position for low cost perks. She proceeded to say that snacks regularly provided by an employer aren’t exempt. She was in fact incorrect, but was there any truth in what she said?
It is not clear if the host was confusing the exemption for VAT gifts, where a £50 annual limit applies, or whether more likely she conflated the two financial limits which apply for Trivial Benefits. i.e. the £50 cost or the £300 per year cap. The £300 per year cap only applies to directors.
The faux par occurred when referring to the other conditions for the exemption. The troublesome example related to bacon rolls given to employees on a regular basis, which was claimed would not be exempt. This is not the case, in fact the exemption can apply to any benefit which is not part of a salary sacrifice arrangement, if it meets the financial limits (£50-£300) and is not any of the following-
- Cash or a voucher that can be converted to cash
- Part of the employee’s contractual earnings; or
- Recognition for “particular services performed by the employee as part of their employment duties”.
A tax expert that was commenting on the matter pointed out, that if an employer offered a bacon roll (or veggie burger) to all his/her employees who agreed to come into work early or stay late for a particular task, which fell within the scope of their normal job, the final condition above would be broken and the exemption would not apply.
Offering your employees, a treat which cost you less than £50 per head from time to time can be exempt but if it is given as an inducement or reward for work it is not. So, offering employees a drink in a bar on a hot day is exempt, but offering the same if they come in to work overtime is not.
Another blog you may find of interest … Take advantage of tax exemptions for Trivial Benefits whilst you can!