The Trivial Benefits Law in the UK

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Gifting items to employees are one of the best ways to reduce workplace stress and to show them how important they are for your business. The problem most of the time is that some of the local laws, like the one in the UK, can make this gifting process a true pain. But there are some ways you can use to eliminate the process and return gifting to something simple and fun.

The latest Trivial Benefits Law in the UK was added to the finance bill. It breaks down exactly what it means to gift items, and it also shows that it’s not a break from the tax law. As a whole, it manages to make the entire process a lot easier and more distinct.

What should you know about the trivial benefits exemption?

“There are some conditions that a gift has to comply with to qualify for the Trivial Benefits Law”, says Alex Papaconstantinou, known for his UK-based gift and voucher site Wikigains. “The idea here is that it should be a maximum of 50 pounds benefit per each person. And while you can share a gift card, you can’t use cash vouchers or cash”. There shouldn’t be any contractual entitlement to the benefit, and it shouldn’t be given as a reward. In the case of close companies, the maximum annual exemption needs to be at around 300 pounds for the office holders and directors; this is not a limit for employees.

Keep in mind that the exemptions aren’t seen as taxable income. They can be applied to family members too, so a spouse can technically benefit from this. But the 50-pound limit is applied to everyone, in case you go over that amount with a single penny, then everything will be taxable, not only the amount that you breach the limit for.

What can you gift according to the HMRC?

As you can imagine, there are some limits in regards to what can be gifted and what’s off-limits. The idea here is that some of the eligible gifts include a summer garden party, a Christmas present, a group meal for birthday celebration or flowers for a new mother.

Some of the ineligible trivial benefits include buying a working lunch, team building events, transport for employees that work overtime or a gift to celebrate various employment targets (which would basically be considered rewards).

Another thing to keep in mind here is that there’s no change to the rules when it comes to the corporation and entertaining tax. Any party that can qualify for the Trivial Benefits Law will also qualify as entertainment, so it’s not counted towards the corporation tax.

Of course, it’s very important to talk with a tax professional if you want to make sure that you create the right gifts according to the Trivial Benefits Law. By doing that, you will ensure that you get to deliver the right gifts without having to deal with any additional taxation or any other problems. It’s the best option by far, and it does tend to work extremely well!

About thespring

Amy

Working as a freelancer since April, 2011. I’m experienced, motivated and detail oriented data miner. Now working as a Talent Acquisition with expertise in MS office, Google doc. Involved in screening, testing and assessing candidates, shortlisting and conducting interviews

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