call us
Glasgow
+44 (0)141 221 2984
Edinburgh
+44 (0)131 225 6366
Stirling
+44 (0)1786 451745
Dumbarton
+44 (0)1389 765238
Hamilton
+44 (0)1698 459444
Glasgow
+44 (0)141 221 2984

Edinburgh
+44 (0)131 225 6366

Stirling
+44 (0)1786 451745

Dumbarton
+44 (0)1389 765238

Hamilton
+44 (0)1698 459444

French Duncan

Government proposes relaxed taxing of benefits-in-kind

27 January 2016

Benefits worth £50 or less, paid for by an employer, are to no longer trigger a tax and national insurance bill for staff. This new legislation could affect employers paying for a leaving do, a taxi home for a sick member of staff, or stationery for someone who works from home. Currently, HM Revenue & Customs (HMRC) can use its discretion to decide what sort of benefits-in-kind should be taxed, or which are deemed trivial and therefore exempt from current tax rules, such as Christmas parties paid for by employers.

Accountancy body ACCA has said that the change would be a big step towards simpler taxes and that at present, employers and employees often get it wrong because HMRC doesn’t have a consistent definition of trivial benefits. The amount of money we’re talking about is relatively low and the government estimates it will forego £5 million of tax in 2016/17 and £10 million per annum thereafter.

The change is expected to cut administrative costs for HMRC and employers as the current system is long-winded and disproportionate to the amounts of tax and national insurance contributions due. ACCA explained that directors and some senior employees of small, family-owned firms are likely to benefit as they, and members of their family or households, will be able to receive benefits-in-kind of up to £300 a year before incurring a tax bill.

This is not the first time such a change has been considered – it was first proposed in the 2014 Budget but was eventually left out of the 2015 Finance Bill.