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Reporting benefits is getting easier

There are a number of welcome changes being made to the taxation of benefits on employees and directors with effect from 6 April 2016. The changes have largely arisen from the work of the Office of Tax Simplification. One in particular will provide much more certainty in the taxation of benefits – a new statutory exemption for ‘trivial benefits’. 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. There is an annual cap of £300 which applies to some people – office holders (eg 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.

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