There is a trivial benefit-in-kind (BiK) exemption that applies to small, non-cash gifts (such as a bottle of wine or a bouquet of flowers) that are occasionally given to employees.

This exemption enables employers to offer modest, tax-efficient rewards while simplifying the administration of BiKs. The BiK exemption allows businesses to recognise employees in a small way without creating additional reporting obligations or tax liabilities.

Trivial benefits are a simple and effective way to provide gestures of goodwill or recognition, as long as they are not given as a reward for work performed or duties carried out. Typical qualifying occasions include events such as a marriage, the birth of a child or other personal landmarks.

Employers also benefit since these trivial BiKs do not need to be included in PAYE settlement agreements or reported on P11D forms, and they are exempt from Class 1A National Insurance contributions.

The tax exemption applies to trivial BiKs where the benefit:

• costs £50 or less;
• is not cash or a cash voucher;
• is not a reward for work or performance; and
• is not in the terms of an employee’s contract.

Trivial benefits provided through a salary sacrifice arrangement are not exempt from tax. In such cases, the employer must report them on form P11D, using the higher of the amount of salary the employee gave up, or the cost of the trivial benefit provided.

For directors or officeholders of close companies (and their families), there is an annual cap of £300 on trivial benefit gifts. The £50 limit still applies per gift but allows up to £300 of non-cash benefits per person each year. If any single gift exceeds £50, the full value becomes taxable.

A Company Voluntary Arrangement (also known as a CVA) is a special arrangement that allows a company with debt problems or that is insolvent to reach a voluntary agreement to pay its business creditors over a fixed period of time.

The arrangement is similar to the Individual Voluntary Arrangement (IVA) that can be used by a sole-trader or self-employed person who is unable to pay their debts.

An application for a CVA can only be made with the agreement of all directors of the company in question or all of the partners of a limited liability partnership (LLP). A CVA can only be created by using the services of an insolvency practitioner. They will be responsible for set up and administration of the arrangement.

Once an insolvency practitioner has been appointed the following steps will take place:

1. The insolvency practitioner will work out an ‘arrangement’ covering the amount of debt the company can pay and a payment schedule. They must do this within a month of being appointed.
2. The insolvency practitioner will write to creditors about the arrangement and invite them to vote on it.
3. A CVA must be approved by creditors representing at least 75% of the debt value of those who vote (rather than 75% of the total overall debt).

If the agreement is approved and the company does not meet the terms of the CVA then any of the creditors can apply to have the business wound up.

Most employees will come across forms such as the P45, P11D and P60 during their working life, and knowing what each one is for can make it much easier to keep track of your tax position.

A P45 is issued to employees who leave their employment or lose their job. The P45 shows how much tax you have paid during the current tax year (6 April to 5 April). The form has four parts: your employer sends Part 1 to HMRC, gives you Part 1A for your records, and you pass Parts 2 and 3 to your new employer or Jobcentre Plus. Employers are legally required to issue a P45. If you do not have one, for example when starting your first job then your new employer will ask for details via a starter checklist to determine your correct tax code.

A P11D form is used by employers to list certain ‘benefits in kind’ provided to directors or employees. 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. Payrolling benefits removes the requirement to complete a P11D for the selected benefits. The completed P11D form is submitted annually to HMRC. The deadline for submitting the 2025-26 form is 6 July 2026. The form can be submitted using commercial software or via HMRC’s PAYE online service.

The P60 is a statement issued to employees after the end of each tax year that shows the amount of tax they have paid on their salary. Employers can provide the P60 form on paper or electronically. Employees should ensure they keep their P60s in a safe place as it is an important record of the amount of tax paid. The deadline for employers to provide employees with a copy of their P60 form for the 2025-26 tax year is 31 May 2026. A P60 must be given to all employees that were on the payroll on the last day of the 2025-26 tax year.

It is quite common for tax codes to be wrong, particularly if your income or employment situation has changed, so it is worth taking a few moments to check that HMRC has the correct information about you.

HMRC usually updates your tax code automatically when your income changes, using information provided by your employer. However, if HMRC has inaccurate details about your income you may be given an incorrect tax code. To fix this, ensure HMRC has your up-to-date income details and check what you need to do if you are on an emergency tax code.

If you believe your tax code is wrong, you can use HMRC’s Check your Income Tax online service to update employment details or to report income changes that might affect your tax code. For example, you can add company benefits, missing income sources, claim employment expenses and update your estimated taxable income. HMRC may then adjust your tax code based on these updates.

If you cannot access the online service, you can contact HMRC directly. Once your details are updated, HMRC will inform both you and your employer or pension provider if your tax code changes. Your next payslip should show your new code and any corrections to your pay.

At the end of the tax year, if you have paid too much or too little tax, HMRC will issue either a P800 tax calculation letter or a Simple Assessment letter to explain any refund or amount owed.

A recent ruling has established that temporary worker arrangements do not constitute a single, continuous employment relationship in which workers retain the unfettered right to refuse assignments. This effectively confirms the prerequisite for a mutuality of obligation when accruing tax breaks.

Mainpay engaged temporary workers in the service sector, contending that its employment relationship constituted a single, albeit discontinuous form of employment, effectively rendering its various workplaces transient. Based on this viewpoint, Mainpay reimbursed its workers for travel and subsistence expenses and deducted these amounts from their income for tax purposes. Mainpay also used rounded sums, or benchmark scales, for subsistence expenses without obtaining formal dispensation from HMRC.

HMRC argued that each assignment was a separate instance of employment, making each workplace permanent for the purpose of a given assignment. This meant that travel and subsistence expenses were likely non-deductible without dispensation.

As the two contracts in question (2010 & 2013) were issued more than four years after the relevant tax year, this required HMRC to prove that the loss of tax was "brought about carelessly" by Mainpay so as to justify a six-year extended time limit. The Tribunal ruled in their favour, finding that neither the 2010 nor the 2013 contract constituted overarching contracts of employment, as the workers retained the unfettered right to refuse assignments. This, in turn, meant they lacked the necessary mutuality of obligation in the gaps between assignments. The Tribunal held that each assignment was an instance of separate employment and that the workplaces were therefore, in effect, permanent, making the expenses non-deductible. The Tribunal also found that Mainpay was "careless" in claiming the deductions, particularly in relation to the 2010 contract, because it had relied on vague assurances from employment lawyers.

This contention was escalated to the Court of Appeal, which rejected Mainpay’s argument that the parties’ intention should be decisive in construing the contract, as what essentially mattered was the reality of the arrangement, which was one of intermittent employment. Thus, each assignment was effectively under a separate contract of employment for the purposes of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA) and, therefore, created a permanent workplace. The Court further upheld the finding that the loss of tax was "brought about carelessly" by Mainpay, validating the extended assessment time limit permitted under the Taxes Management Act 1970 (TMA).  

The case provides a clear distinction between a general agreement that governs future work and an actual contract of employment that lays out the terms under which future, separate contracts of employment will be formed. This type of agreement alone does not create a state of continuous employment. Companies are thus advised to seek advice when creating discontinuous employment frameworks in an effort to minimise tax liabilities.