UK Government Announces The Deferment Of The Trivial Benefits Exemption.

Plans, announced in the 2015 Budget, to make limited company contractors and other small employers exempt from having to report trivial benefits have been shelved by the Government – for the time being at least because of the imminent election.

The news has received mixed reviews as you might expect, with some praising the decision and others less than happy. So as it stands, contractors and small employers must continue to declare taxable benefits in kind under £50.

The cap, which was unveiled in the 2015 Budget, was not labelled the cause of the delay by the Treasury, which it said owed to the “accelerated parliamentary process” that the bill was subjected to. The upshot of the delay means small firms and contractors will have to continue to use HM Revenue and Custom’s guidelines for declarations of any benefits in kind under £50, though these guidelines have been branded “imprecise” and “informal.”

What this means in the short term at least is that employers who have been considering changing their processes to reflect the commencement of an exemption for trivial benefits in kind under £50, will now have to shelve their plans and will have to revert to the original rules.

The news, as expected, was greeted with dismay by many small firms who would have benefited from the scrapping of the ruling, with some small business owners declaring the decision controversial. However, many accountants and tax legislation experts support the decision to delay the changes, though they do believe that in the longer term the changes will need to be applied.

A spokesperson for the Association of Taxation Technicians said:

 

“We felt that HMRC’s understandable zeal to eliminate scope for potential abuse of the proposed exemption had undermined its very purpose; namely the removal of the administrative burden of reporting tax and NIC on low value benefits.”

“We are therefore pleased to see that the measure has been dropped from the pre-election Finance Bill.”

“We hope that the Revenue will use the time afforded by the postponement to reconsider the finer details of some aspects of the policy.”

Steve Webb, employment tax director, KPMG, believes the delay can be attributed to a £300 cap on gifts to family members in close companies being recently announced as an anti-avoidance tax measure.

If you would like to know more about tax planning and minimising tax liabilities, then why not speak to the accountants at Steven Glicher? With our expert help we can complete a thorough tax planning review and ensure that you make the most of all the available tax-free allowances and only pay what you are legally obliged to.

For further information on our tax planning services, contact Steven Glicher accountants on 0161 485 8007 or email info@stevenglicher.co.uk.

Leave a Reply

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

News / Blog

20th
June

New survey discovers which major financial issues are keeping SME’s awake at night

If you run as SME, what causes you sleepless nights? What financial issues give you stress and what keeps you…

13th
June

SMEs hardest hit by the delays to business rates compensation claims Federation of Small Businesses

The FSB and SMEs have spoken out strongly against the continued delays to business rates compensation promised to those hardest…

6th
June

IPSE launches its manifesto and calls for a root and branch reform of the UK tax system

It’s not only political parties who launch manifestos in the run-up to an election. Business groups and trade associations also…

31st
May

Two months after the Budget and SMEs are still waiting for business rate relief

Back in April Steven Glicher accountants brought you the news that the government’s £300 million business rates relief package to…