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When do HMRC deem certain benefits to be trivial?

3 June 13 | By: Jas Jhooty

Introduction

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With the recent news that HMRC are seeking to tax the store Iceland £2.5 million for taking 800 managers to Disneyland for a so-called customer services training trip, we thought it was a good time to remind you what benefits HMRC deem to be trivial in nature.

Obviously it will be nigh on impossible to convince HMRC that £5,000 spent on each Iceland store manager for a trip of a lifetime is trivial!

HMRC guidance

EIM21863 gives quite clear examples of the limited circumstances under which HMRC will ignore certain employer provided benefits. Unfortunately there is no statutory definition as to what is the upper limit for benefits below which they may be deemed to be trivial.

The examples given are for: -

Tea and coffee

This is quite straight forward, whether or not beverages are provided to all members of staff or only to a select few. The provision of free refreshments to employees is considered by HMRC to be a trivial benefit.

Problems will arise if there is any sort of charge to employees for imbibing their favourite hot or cold beverages.

If you have a dispensing machine make sure it is free. The use of tokens or extra cash paid to employees to limit the number of drinks they can have per day or week will be seen as additional pay which will be subject to PAYE tax & Class 1NIC.

Repairs to employer-provided cycles

As long as the average repair cost to the employer for each incident is no more than £20, then these costs will be deemed trivial in nature.

Small gifts to employees

The inclusion of small gifts made to staff at particular life events (such as marriage, illness or giving birth) as trivial benefits came about after unfavourable publicity HMRC received a few years ago, when the press starting reporting cases where overzealous HMRC Employer Compliance Officers started taxing employers for sending flowers to ill staff.

Seasonal gifts

This is a very subjective area where the lack of any set monetary limits can lead to the provision of some gifts to be quite contentious. For example you may be a high tech firm and you decide to provide MP3 players to all of your well paid staff at the cost of £60 each. £60 will be seen as trivial by both you and your employees, but will HMRC see it the same way?

More traditional gifts such as a turkey, or a bottle of wine, or a box of chocolates appear to be acceptable to HMRC. However a hamper or a case of wine is not allowable. There have been some instances where we have dealt with savvy employers who have sourced their own Christmas hampers filled with bargain two-for-one purchases from their local supermarket that have been deemed as being trivial because the total cost of each hamper was less than £20.

Seasonal flu jabs

Strangely only the costs of providing the seasonal flu jab can be deemed as a trivial benefit. Immunisation costs against pandemic flu or other communicable diseases will be deemed taxable.

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