Spring 2005 Newsletter Content Home Sweet Pension Anything To Declare? Death And Taxes His And Hers Oh, Gross! We Didn't Mean It Agassi Wins Time To Go It Could Be Worse... Trivial Pursuit Re: Mortgages A Marriage Made In... Time's Money Show Business Scam Of The Decade? Gift Aid Vat's Hot! Wait For It A Good Buy? Know Your Articles Rights And Wrongs

Trivial Pursuit In the past, there have been stories highlighting how petty some tax auditors can be when it comes to looking for taxable benefits in kind that employers give to employees. A couple of years ago, the newspapers reported a PAYE inspector trying to tax a bunch of flowers given to someone in hospital - that may have been an urban myth, but it has always been a principle that anything your employer gives you is taxable unless there's a good reason for it not to be. Now, surprisingly, the Revenue appear to have had a change of heart. It seems they have realised that chasing some of these benefits is not worth the tax, let alone the resentment it causes. The taxman's own handbook now tells inspectors not to insist that every 'trivial benefit' should be taxed, 'irrespective of the administrative burdens on both the employer and the Inland Revenue'. Inspectors are to 'strike a balance' between sensible practical administration of the tax system and the need to prevent employers taking advantage. Some examples are given. Anything which is 'near cash', such as a voucher, should always be taxable. The same goes for anything that clearly saves the employee money, such as paying for a holiday, commuting costs, or weekly shopping. But it may be possible to disregard small presents, for example on birthdays or other important dates, without risking the auditor's wrath. It may also be worth checking with your own inspector how this new relaxed attitude will be applied. If you would like us to write to them, we will be happy to do so. The Revenue guidance is in the Employment Income Manual at 21860 - 21861. This includes the suggestion that in borderline cases, the presumption should be to tax something that represents a clear reward to the employee but to give the employer the benefit of the doubt where "it is more of a 'business' related matter". Some employers now write to the Inspector to agree all of the following: * a dispensation - items that are not taxable, and need not be returned on P11D because they would be covered by a matching claim for expenses; * a PAYE settlement agreement - items that are taxable, but they will not appear on P11D because the employer will pay the tax; * an agreement of trivial benefits - items that are technically taxable, but will be ignored under the principles of EIM 21860.