Trivial Benefits in Kind (BIK’s) from 6 April 2016 – Don’t get caught by the National Insurance Trap

 The new exemption for trivial employer-provided benefits in kind (BIK) applies for income tax from 6 April 2016.

This means no values need be entered on forms P11D and no liability to Class 1A NIC on trivial BIK’s given after 5 April 2016. BIK’s that are likely to be in scope as trivial could include a bunch of flowers, a bottle of champagne or a box of chocolates.

However, there will be a short period of misalignment with NIC and there could be a potential problem for benefits such as non-cash vouchers, eg a shopping voucher or match ticket. This is because although a P11D item for tax (entry no longer required from 2016/17), it is within Class 1 for NIC (so needs to be accounted for via the payroll). The problem here is that the exemption for Class 1 NIC will not come into force until Finance Act 2016 receives Royal Assent, which will most likely be in July 2016.

The solution for anybody using vouchers is to ensure they are not given until after Royal Assent is received.

If the new exemption affects you or your business and you would like any assistance, please feel free to contact us.