A number of benefits can be provided by employers to their staff without creating a taxable benefit in kind on the employee.
- Trivial benefits in kind –the benefit cannot be cash, the cost does not exceed £50 and it is not provided in recognition of particular services or as part of the employment contract.
- The provision of one mobile phone, with the contract being between the employer and the supplier.
- An interest free loan up to the £10,000.
- The provision of an annual health check.
- Parties for employees are a non-taxable benefit in kind if the annual cost of the party / parties does not exceed £150 (inclusive of VAT) per head for the year.
- Training course costs are a non-taxable benefit if paid for by the employer for courses which relate to the employee’s job.
- An employer can make pension contributions on an employee’s behalf and also contribute to a policy that pays out a lump sum on the employee’s death without a taxable benefit arising.
- Refreshments can be provided to employees on a reasonable scale without incurring a taxable benefit on the basis that these are available to all employees.
- A pool car is a non-taxable benefit on the basis that it is not used for personal use and the pool car rules are followed. Any private use would have to be incidental to business use.
- A company van may be provided to an employee for business use only and would not be a taxable benefit on the employee. With this being a van (rather than a car) commuting from home to the employee’s work place would not be classed as personal use and therefore no taxable benefit would arise.
- Work and safety clothes provided by the employer to the employee (e.g. overalls and protective clothing) are not a taxable benefit.
- Job related living accommodation can also be a tax efficient benefit in kind. There are particular rules which apply.
- Relevant Life Insurance Policies which provide life insurance for employees will not normally be treated as a benefit in kind.
The above provides an overview of the benefits in kind which can be provided and the detailed legislation needs to be considered in the provision of any benefits to ensure the benefit qualifies for the exemption.
Our Tax Department can provide assistance with P11d calculations and our Payroll Bureau is familiar with setting up employee benefit schemes – please get in touch if there is anything we can help you with.
The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.