Expenses and benefits

A number of changes came into force on 6 April

The previously announced changes on trivial benefits were not included in the Finance Act 2015, so the income tax exemption will not come into force from 6 April 2015 as previously advised.

Changes that did make it through were the abolition of the £8,500 threshold, collection of income tax on benefits in kind (BiKs) in real time (payrolling), and the paid and reimbursed expenses exemption.

The following Q&A has been issued by HMRC:

Update on trivial BiKs exemption

  1. Why the sudden change?

    The Finance Bill runs to a slightly different process ahead of an election because of the need to ensure that the resulting act receives Royal Assent ahead of Parliament being dissolved.

    Given the accelerated process, some measures were deferred for consideration in a future Finance Bill.

  2. When will the exemption be legislated?

    We are hopeful that it will be included in a subsequent Finance Bill.

    However, we do not know when that would be.

  3. I’ve already prepared my payroll. Should I keep the changes I’ve made for the following year?

    The measure has been deferred, not scrapped; it is planned to be legislated in a future Finance Bill.  

    An announcement will be made prior to introduction of the exemption, allowing employers sufficient time to update their systems ahead of exemption being introduced. 

  4. What guidance should employers follow in the meantime?

    In determining the appropriate tax treatment, employers should continue to apply the guidance in the Employment Income Manual at EIM21860 onwards.  

    This applies where an employer has agreed with HMRC for a particular benefit in kind to be treated as trivial and therefore not reported on a form P11D or included in a PAYE Settlement Agreement.

  5. I have already got an agreement from HMRC that I can treat a particular benefit in kind as trivial. Does this still apply?

    All agreements currently in place will still apply as long as there has been no change in the circumstances or type of benefits in kind provided.

To access the guidance, visit the ‘Related links’ section on this page.