Our article lists many examples of tax free benefits for employees.
We will cover:
- The advantages of rewarding your employees
- Some examples of benefits which are free of tax
Tax free rewards for your employees
What are the key tax-free benefits or ‘perks’ that can incentivise your staff?
You can provide an employee with any combinations of the following rewards free of tax and National Insurance Contributions (NICs).
You do not have to pay tax on benefits and expenses covered by concessions or exemptions.
If these apply to you, do not enter the benefits and expenses concerned on your tax return.
Here’s what you can offer your employees as incentives without paying any tax. Here are the categories:
Accommodation, supplies and services on your business premises
- A mobile phone or a Personal Digital Assistant (PDA)
- Equipment (eg. computers, laptops, smartphones…)
For employees to use in performing their duties.
Free or subsidised meals
- In a staff canteen or in the form of vouchers
- Workplace refreshments
- Breakfast for early starters if available to all staff (see Lunch)
- Lunch and refreshments while at work
- Pension advice to the value of £500
- Any pension contributions via a pension scheme or from employer
Medical treatment & check-ups
Employers can offer…
- Medical treatment of up to £500 per tax year to return to work
- Medical and optical check-ups (max. one per year)
Working from home
You can pay employees up to £6 a week for employees working regularly from home.
Incidental overnight expenses
Business journeys such as…
- Travel expenses to temporary workplaces
- Travel expenses for late night working
- Subsistence costs when travelling on business (£5/night in the UK and £10/night outside the UK)
- Training and course fees
For employees to learn and/or develop any skills to use in their workplace.
Long service awards
Reward employees with at least 20 years of service in the company: max £50 per year of service.
Car, motorcycle and bicycle parking
- Free vehicle parking at work
- Workspace charging facilities for electric vehicles
Commuting to work
For transportation to and from the workplace and no private use of the following:
- A pool car
- Low benefit-cost on low emission car
- Low benefit-cost on low emission van
- A minibus for commuting
- A bicycle and safety equipment
Christmas or other annual party
Annual parties and functions such as Christmas dinners or summer parties, which are open to staff and cost no more than £150 per head.
‘Trivial’ gifts and benefits
If they cost £50 or less, it isn’t cash or a cash voucher, it isn’t a reward for an employee’s work or performance and isn’t in the terms of their contract.
Other tax-free benefits
Here are a few more tax-free benefits:
- Round sum overnight allowances
- Interest-free borrowing beneficial loan (up to £10,000)
- Recreational benefits
- A personal numberplate
- Relocation expenses
- Reimbursement of travel costs when coming to work in the UK
- Capital growth in your company via EMI options
- £2,000 of Employee Status shares (only applied up to 2 December 2016)
- Staff Suggestion Schemes: £25 to £5,000
- Legal fees: employees no longer pay tax on legal support from their employer
- Job-related accommodation
- Life assurance policy premiums that provide an employee with death benefits
- Premiums paid to a QROPS that provides retirement benefits are tax-exempt benefits
These rewards can be a tax and NI saving for both employee and employer – so they are worth taking advantage of!
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Kind regards Ilyas