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Move to end Taxation of
trivial employee benefits has been backed by campaigners
THE Low Incomes Tax Reform Group has backed new
legislation to stop workers from facing Tax charges on low value benefits
they receive from their employers.
LITRG believes the current rules governing what constitutes a Tax Free
trivial benefit are too subjective and can leave employees shocked and
confused as to why they end up having to foot a Tax Bill for receiving a
minor item. The group supports the introduction of new, clearer, statutory
rules on trivial benefits because it will reduce the costs and
administration burdens for employers and HMRC; and also mean employees do
not face an unexpected Tax charge on items below £50 and which meet other
new conditions for the exemption.
The changes should mean that receiving gifts such as a bottle of wine given
to celebrate the birth of an employee's child or book tokens or a bunch of
flowers from a manager, will not cause the recipient a Tax Headache in the
future.
However, LITRG has recommended that the new £50 statutory limit on each
individual benefit that can be received without Tax, be kept under constant
review, something the Government is yet to commit to. The Tax campaigners
are concerned about an oversight which is the effect of the exemption in
relation to workers on Tax Credits, Universal Credit and means tested
benefits. Such people may not know whether they have to report a trivial
benefit as income and there is a risk that such a minor benefit may impact
on the amount of money they get in welfare payments.
Anthony Thomas, LITRG Chairman, said:-
"We expect the change should
mean that employees do not face the shock and confusion of a Tax charge on
items that neither they nor their employers in practical terms view as a
taxable benefit. This should help companies with their administration of
their businesses and frankly allow workers to enjoy what has been given to
them without worrying about the cost. The new statutory exemption will
help to clarify what is a trivial benefit in kind and we welcome a movement
towards a more'principles based system' rather than the current subjective
1. It is vital that the £50 limit is kept up to date, otherwise the
exemption will become obsolete very quickly and not provide the long term
simplification of administration which this is designed to achieve.
Legislation for Tax Credits, Universal Credit and means-tested benefits
should be amended, if necessary, to ensure that exempt trivial benefits are
ignored for these purposes. This is important, as the employee in receipt of
the trivial benefit will have no record of its value."
A trivial benefit will qualify for the exemption if it meets 4
conditions: it costs less than £50, it is not cash or a cash voucher, it is
not part of a salary sacrifice arrangement and it is not provided in
recognition of the employment. The changes will come into effect on 6 April
2016.
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