Summer Newsletter and ‘Trivial Benefits’
Anyone old enough to remember the 1970s and 1980s must be suffering from deja vu at the moment. Soaring inflation, industrial action, ‘evil Russians’, even Arthur Scargill popping up on a picket line. What to do? I think we just have to be stoic. Accept there are some things we have no control over and at the same time make sure those things we can control are properly managed. Part of this is making sure we are aware of what is happening and what are choices are.
With the above in mind, our Summer Newsletter can be downloaded by clicking on the link below and provides an update on the latest tax and business issues.
SUMMER NEWSLETTER
It contains information on:
Helping your employees (and see below on ‘Trivial Benefits’).
Preparing for Making Tax Digital for income tax
Self employed Class 2 NIC (and see below for an important update)
And much more!
We hope you find it interesting and if any of the items raise questions, do please get in touch.
Trivial Benefits - Tax Free Rewards for employees
‘Trivial Benefits’ – tax free rewards for employees
Trivial benefits are best described as ‘token gifts’, given to employees. This could be a bottle of wine, chocolates or even an Amazon (or similar) voucher so long as the voucher cannot be exchanged for cash.
Providing these is a tax deduction for the employer and no tax arises on the employee.
A benefit can be 'trivial' if it meets all the following conditions :
Costs £50 or less to provide (per employee and including VAT)
It isn't cash or a voucher that can be exchanged for cash.
It isn't a reward for work or performance
It isn't in the terms of an employee's contract
Why would employers want to give trivial benefits?
Times are tough at the moment and it may not be possible to give large or even any pay rises but this is a way of showing that you are still thinking about your employees and hopefully, they make for a happier workforce.
In most instances, an employee can receive multiple trivial benefits throughout the year, as long as each one does not exceed £50. However, for most owner managed businesses the exemption is capped at a total cost of £300 in the tax year where the benefit is provided to an individual who is a director or secretary of the company (or a member of their family or household).
And if anyone is wondering, yes, this could apply to a one or two director company with no other employees – you could give yourself 6 x £50 Amazon vouchers during a tax year with a deduction for the company and no tax on you.
Class 2 NIC - IMPORTANT IF YOU ARE SELF EMPLOYED
This is paid by self-employed individuals and helps create qualifying contribution years for state pension and other benefit purposes. Up to 2015-16 these were collected separately via a direct debit but in 2015-16 collection became part of the self assessment system. Bizarrely, because HMRC operate two separate computer systems, it is possible to be registered as self employed for self assessment without being registered for Class 2 NIC. This could mean someone who is self employed could end up with gaps in their contribution record which could impact on state pension entitlement. If you are self-employed, you should check on-line (through your Government Gateway) what your NIC pension contribution record is. Unfortunately we can’t do this for you as we cannot access that part of your records.
If you are self-employed but seem to have gaps in your contribution record, please get in touch.
If you have any questions, on anything, don’t hesitate to contact us below: