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Trivial benefits are small gifts or perks given to employees that are exempt from tax and benefit reporting obligations. But bosses must adhere to certain conditions, such as a cost limit of £50 per employee – or the average cost per employee if provided to a group of employees.

Additionally, the benefit cannot be cash or a cash voucher, and it cannot be provided in recognition of particular services performed as part of an employee's normal employment duties or as a reward.

Providing these conditions are met, the benefit is exempt from tax and reporting obligations. However, if any of the conditions are not satisfied or if the cost of the benefit exceeds £50, the whole amount will be taxable rather than just the excess.

For employees who are not directors or stakeholders in the business, there are no limits on the number of gifts you can make in this way

Director/shareholders beware

However, if you are a director or stakeholder in the business there are limits on the number of gifts that can be made.

For example, if you are the director of a ‘close’ company – a limited company that’s run by five or fewer shareholders – the exemption is capped at a total of £300 in the tax year.

Examples of trivial benefits include:

• taking a group of employees out for a meal to celebrate a birthday
• buying each employee, a Christmas or birthday present
• flowers on the birth of a new baby
• a summer garden party for employees

What else is non-taxable?

Other non-taxable benefits that can be provided to employees include payments for business mileage in an employee's own car, employer payments into a registered pension scheme, medical treatment to help an employee return to work, and meals provided in a staff canteen.

Workplace nursery places for the children of employees and childcare vouchers (if entered into the voucher scheme prior to October 2018) are also non-taxable benefits, as are removal and relocation expenses up to a maximum of £8,000 per move, or use of a pool car.

Expenses that are paid or reimbursed by employers, as long as they were incurred entirely for business purposes, are also exempt from tax.

Trivial benefits and other non-taxable benefits can be a good way for employers to incentivise employees while also being tax-efficient. However, it is important to ensure that the conditions for exemption are met and that any benefits provided are reasonable and not excessive.

If you are in any doubt, speak to us to ensure you are complying with all relevant regulations and guidelines.

Please call of you would like to discuss the implementation of this relief for your business.

Death and taxes are certainties of life, according to Benjamin Franklin, and if you are in business, you should be aware which taxes you are liable to pay.

Our mantra is – by understanding the taxes that your business is required to pay – you can plan and budget accordingly. No surprises…

There are several types of taxes that businesses may be required to pay, depending on their structure and other factors. These include:

Corporation Tax: Limited companies pay corporation tax on their taxable profits. Companies making more than £250,000 profit, will pay the main rate of Corporation Tax, currently 25 per cent, but smaller companies, with taxable profits of £50,000 or less, will pay the ‘small profits rate’ of 19%. If profits are between £50,000 and £250,000 marginal relief will apply – in effect, the rate gradually increases from 19% to 25%.

These thresholds will be reduced if companies have associated companies.

Income Tax: Sole traders and partners pay income tax on their adjusted business profits earned in the tax year. The amount they pay depends on their taxable income. In England, Wales and Northern Ireland rates vary from a 20% basic rate, a 40% higher rate and a 45% additional rate.

Scotland has different rates to the rest of the UK. They vary from 19% to 48% and for 2024-25 there are six rates.

Dividends. Dividends are taxed as income but at different rates. The rates in England and Wales are:

• Up to £500 per year – no tax payable.
• Above £500 up to £12,570 (if personal allowance is not used elsewhere) no tax to pay.
• If dividends form part of basic rate band – taxed at 8.75%.
• If dividends form part of higher rate band – taxed at 33.75%.
• If dividends form part of additional rate band – taxed at 39.35%.

VAT: VAT is added to most goods and services with the rate of 20 per cent. You can take a look on gov.uk for guidance on what items are zero-rated, like books, children’s clothing and, oddly, motorcycle helmets. If your business has a turnover of more than £90,000, you must be VAT-registered. If your turnover fall beneath the threshold, you can still register for VAT.

Business Rates: Business rates are charged on most business premises, based on the value of the property.

Employers' National Insurance contributions: If your business has employees, you must pay employers’ National Insurance contributions (NICs) on their wages and any benefits you provide. Smaller firms may be eligible to claim the Employment Allowance and reduce the impact of employer’s contributions in certain circumstances.

Capital Gains Tax: Sole traders, partners and companies may have to pay capital gains tax when selling assets that have increased in value. For sole traders and partners this tax is collected as part of self-assessment, company capital gains are added to trading profits and subject to corporation tax.

Business assets you may need to pay tax on include disposals of:

• land and buildings
• fixtures and fittings
• shares
• registered trademarks
• your business’s reputation

Tips for business owners

Keep accurate records: Keeping accurate records is crucial to ensure that you pay the right amount of tax. You must keep track of all your business transactions, expenses and income, and make sure to file your tax returns on time.

Plan ahead: Planning ahead can help you budget for your tax payments and avoid any surprises. Make sure to know when your tax payments are due and set aside money to cover them.

Seek professional advice: Tax laws can be complicated, and seeking professional advice can help you navigate them. We can help you understand your tax obligations and identify any tax reliefs that you may be eligible for.

Take advantage of tax reliefs: There are several tax reliefs available for businesses, such as small business rates relief and capital allowances. Make sure to check if your business qualifies for any of these reliefs.

Consider your business structure: Your business structure can have a significant impact on your tax liabilities. See if a limited company or a sole trader/partnership structure is more suitable for your business.

Consideration of taxes is an essential part of any business planning operation. Being aware and planning accordingly are key to meeting your tax obligations.

We are here to help. Get in touch if there is anything you would like to discuss.

It will not have escaped your attention that Prime Minister Sunak will need to call a general election at sometime during 2024. The very latest election date that can be held is 28 January 2025.

If results follow the polls, we are likely to see the Labour Party in charge once more.

New brooms

Politics being the moveable feast that it is, the crystal ball to forecast how a change of government will affect us has yet to be invented, but what will be the likely impacts?

The new incumbents will want to apply their legislative agenda as soon as possible and so we can expect a formal budget following the election.

Labour’s five point plan for growth

Their published agenda covers:

• Putting economic stability first by introducing a new fiscal lock to bring economic security back to our national and family finances.
• Getting Britain building again by reforming planning laws to kickstart 1.5 million new homes, transport, clean energy, and new industries in all parts of the country.
• Backing British business with a new industrial strategy created in partnership with business to maximise Britain’s strengths in life sciences, digital, creative, financial industries, clean power and automotive sectors. Creating a National Wealth Fund to unlock billions of pounds of private investment, crowding in 3 times the amount of public investment.
• Kickstarting a skills revolution. A new generation of Technical Excellence Colleges, offering more high quality apprenticeships and training opportunities tailored to local jobs in all parts of the country.
• Making Work Pay by introducing a new deal for working people and delivering a genuine living wage, banning zero hours contracts and ending fire and rehire.

Affordability will be a key issue, where will the money come from? Will we see higher taxes at the higher rates, will there be VAT changes (VAT charged on private school fees for example).

Of course, it is one thing to have the intent to drive home these agendas, it is quite another to achieve these lofty ideals if present international uncertainties are factored into the mix.

Expect change later rather than sooner

Whichever party or parties win control of the next parliament, initially, we are unlikely to see a rapid improvement in economic activity.

Interest rates are sticking at higher levels and many of us are faced with increasing mortgage repayments. Perhaps the Bank of England will lower bank rates as the year progresses.

Barring further unrest in the world – and with events in Israel and Ukraine continuing to unsettle world markets – the free flow of goods is likely to be disrupted and will provide upward pressure on prices.

On the basis that everything changes, let us hope that before we are faced with a further election in five years’ time, things will have changed for the better whoever takes charge of government in that period.

Meantime, we must soldier on

There is no doubt that the last few years have been extraordinarily difficult and challenging times. Let us hope that the new government will have the skills and will to ease the effects of these challenges and show us the light at the end of the tunnel.

Would it be too much to ask?

As we have reported previously, one of the key aims of the Economic Crime and Corporate Transparency Act is to improve the accuracy and quality of the data on Companies House registers.

Under the new legislation, Companies House has enhanced powers to query information that appears to be incorrect or inconsistent with information held.

It is the intention that over time this will improve the accuracy and integrity of the information on the register and safeguard against misleading or unlawful activity.

What we can expect

In the coming months we are going to see a number of changes to the scope of information that Companies House requires about your company. In a recent post, the registrar confirmed that improving the quality of the data held on their registers would be their next target for improvement. They said:

“We can now take a more robust approach to dealing with information that’s been provided to us by querying information and requesting supporting evidence.

“We’ll remove information if it’s inaccurate, incomplete, false or fraudulent. We’ll use annotations on the register to let users know about potential issues with the information that’s been supplied to us.

“We’re also taking steps to clean up the register, using data matching to identify and remove inaccurate information. We have more powers to share information with law enforcement agencies and other government departments.”

The new requirement has teeth

Companies House have confirmed that you must respond quickly when asked for more information so that they can decide the next steps. If your case escalates to a formal query for information and you still do not respond, this will be considered a criminal offence and there could be serious consequences including a financial penalty, an annotation on the company’s record or prosecution.

Employers can register on a voluntary basis (before the start of the tax year) to report and account for tax on certain benefits and expenses via the RTI system. This is known as payrolling and removes the requirement to complete a P11D for the selected benefits at the tax year end.

The deadline for submitting the 2023-24 forms P11D, P11D(b) and P9D is 6 July 2024. These forms can be submitted using commercial software or via HMRC’s PAYE online service. HMRC no longer accepts paper P11D and P11D(b) forms. Employees must also be provided with a copy of the information relating to them on these forms by the same date. P11D forms are used to provide information to HMRC on all Benefits in Kind (BiKs), including those under the Optional Remuneration Arrangements (OpRAs) unless the employer has registered to payroll benefits.

It should be noted that a P11D(b) is still required for Class 1A National Insurance payments regardless of whether the benefits are being reported via P11D or payrolled. The deadline for paying Class 1A NICs is 22 July 2024 (or 19 July if paying by cheque).

Where no benefits were provided from 6 April 2023 to 5 April 2024 and a form P11D(b) or P11D(b) reminder is received, employers can either submit a 'nil' return or notify HMRC online that no return is required. Employers should ensure that they complete their P11D's accurately, including all the details of cars and loans provided. There are penalties of £100 per 50 employees for each month or part month a P11D(b) is late. There are also penalties and interest if late payments are made.

1 May 2024 – Due date for corporation tax due for the year ended 30 July 2023.

19 May 2024 – PAYE and NIC deductions due for month ended 5 May 2024. (If you pay your tax electronically the due date is 22 May 2024).

19 May 2024 – Filing deadline for the CIS300 monthly return for the month ended 5 May 2024.

19 May 2024 – CIS tax deducted for the month ended 5 May 2023 is payable by today.

31 May 2024 – Ensure all employees have been given their P60s for the 2023/24 tax year.

1 June 2024 – Due date for corporation tax due for the year ended 31 August 2023.

19 June 2024 – PAYE and NIC deductions due for month ended 5 June 2024. (If you pay your tax electronically the due date is 22 June 2024).

19 June 2024 – Filing deadline for the CIS300 monthly return for the month ended 5 June 2024.

19 June 2024 – CIS tax deducted for the month ended 5 June 2024 is payable by today.

You can usually claim tax relief on private pension contributions worth up to 100% of your annual earnings, subject to the overriding limits. Tax relief is paid on pension contributions at the highest rate of income tax paid.

This means that if you are:

• A basic rate taxpayer, you get 20% pension tax relief.
• A higher rate taxpayer, you can claim 40% pension tax relief.
• An additional rate taxpayer, you can claim 45% pension tax relief.

The first 20% of tax relief is usually automatically applied by your employer with no further action required if you are a basic-rate taxpayer. If you are a higher rate or additional rate taxpayer, you can claim back any further reliefs on your self-assessment tax return.

The above applies for claiming tax relief in England, Wales or Northern Ireland. There are some regional differences if you are based in Scotland.

There is an annual allowance for tax relief on pensions of £60,000. This limit remains unchanged in the new 2024-25 tax year. There is also a rule that allows you to carry forward any unused amount of your annual allowance for three tax years.

The lifetime limit for tax relief on pension contributions was removed with effect from 6 April 2023 and has now been abolished.

HMRC’s free tax app is available to download from the App Store for iOS and from the Google Play Store for Android. The latest version of the app includes updated functionality.

The app can be used to see:

• your tax code and National Insurance number;
• your income and benefits;
• your income from work in the previous 5 years;
• how much you will receive in tax credits and when they will be paid;
• your Unique Taxpayer Reference (UTR) self-assessment;
• how much self-assessment tax you owe;
• your Child Benefit; and
• your State Pension.

The app can also be used to complete a number of tasks that usually require the user to be logged on to a computer. This includes:

• get an estimate of the tax you need to pay;
• make a self-assessment payment;
• set a reminder to make a self-assessment payment;
• report tax credits changes and complete your renewal;
• access your Help to Save account;
• using HMRC’s tax calculator to work out your take home pay after Income Tax and National Insurance deductions;
• track forms and letters you have sent to HMRC;
• claim a refund if you have paid too much tax;
• ask HMRC’s digital assistant for help and information;
• update your name and / or postal address;
• save your National Insurance number to your digital wallet; and
• choose to be contacted by HMRC electronically, instead of by letter.

Employers can register on a voluntary basis (before the start of the tax year) to report and account for tax on certain benefits and expenses via the RTI system. This is known as payrolling and removes the requirement to complete a P11D for the selected benefits at the tax year end.

Registration is now open to payroll your benefits from 6 April 2024. Effective 6 April 2023, HMRC ceased accepting new informal arrangements. If you have had one of these informal arrangements in place, you must register to payroll your expenses and benefits for 2024-25.

The deadline for submitting the 2023-24 forms P11D, P11D(b) and P9D is 6 July 2024. These forms can be submitted using commercial software or via HMRC’s PAYE online service. HMRC no longer accepts paper P11D and P11D(b) forms. Employees must also be provided with a copy of the information relating to them on these forms by the same date. P11D forms are used to provide information to HMRC on all Benefits in Kind (BiKs), including those under the Optional Remuneration Arrangements (OpRAs) unless the employer has registered to payroll benefits.

It should be noted that a P11D(b) is still required for Class 1A National Insurance payments regardless of whether the benefits are being reported via P11D or payrolled. The deadline for paying Class 1A NICs is 22 July 2024 (or 19 July if paying by cheque).

Where no benefits were provided from 6 April 2023 to 5 April 2024 and a form P11D(b) or P11D(b) reminder is received, employers can either submit a 'nil' return or notify HMRC online that no return is required. Employers should ensure that they complete their P11D's accurately, including all the details of cars and loans provided. There are penalties of £100 per 50 employees for each month or part month a P11D(b) is late. There are also penalties and interest if late payments are made.

HMRC’s Childcare Account can be used to claim free childcare (if eligible) or pay for Tax-Free Childcare. HMRC’s sign in page for the account states that in order ‘…to keep getting free childcare or Tax-Free Childcare, you must sign in every 3 months and confirm your details are up to date’.

There are various eligibility rules that must be met to claim free childcare via the Childcare Account. As a starting point you must be the parents of a child two, three or four years old and living in England. From September 2024, the scheme will be extended for children of working parents from the age of 9 months. You can apply from 12 May 2024. There are different schemes in Scotland, Wales and Northern Ireland

The Childcare Account can also be used to claim under the Tax-Free Childcare (TFC) scheme. The TFC scheme can help parents of children aged up to 11 years old (17 for those with certain disabilities). The TFC scheme helps support working families with their childcare costs. There are many registered childcare providers including childminders, breakfast and after school clubs and approved play schemes signed up across the UK. Parents can pay into their account regularly and save up their TFC allowance to use during school holidays.

The TFC scheme provides for a government top-up on parental contributions. For every £8 contributed by parents an additional £2 top up payment will be funded by Government up to a maximum total of £10,000 per child per year. This will give parents an annual childcare savings of up to £2,000 per child (and up to £4,000 for disabled children until the age of 17).

The TFC scheme is open to all qualifying parents including the self-employed and those on a minimum wage. The scheme is also available to parents on paid sick leave as well as those on paid and unpaid statutory maternity, paternity and adoption leave. In order to be eligible to use the scheme, parents will have to be in work at least 16 hours per week and earn at least the National Minimum Wage or Living Wage. If either parent earns more than £100,000, both parents are unable to use the scheme.