Income Tax (Earnings and Pensions) Act 2003 section 323B

Section 323A: calculation of available exempt amount

Section 323B explains how to calculate the remaining annual exempt amount available for tax-free trivial benefits, particularly where the employer is a close company and the recipient is a director, office-holder, or a member of their family or household.

• The annual exempt amount for trivial benefits is capped at £300 per tax year for directors and office-holders of close companies (and their family or household members).
• The available exempt amount is calculated by deducting from the £300 cap the cost of all eligible trivial benefits already provided to the employee (or allocated to them) earlier in the tax year.
• Where a trivial benefit is provided to a family or household member who is not themselves an employee, its cost is shared equally among all connected directors, office-holders, relevant employees, and qualifying former employees who are members of that person's family or household.
• Eligible benefits are those meeting conditions A to D in section 323A, and the term "benefit cost" carries the same meaning as defined in that section.