We regularly get asked by our clients how they can reward their employees tax free. There are a number of benefits which are covered by specific, statutory exemptions meaning they’re tax free or very tax efficient! Benefits to consider include:
- Pensions – beyond auto enrolment, pensions are a key benefit for employees and can usually be provided free from NIC or income tax. Contribute even more with salary sacrifice or for company Director’s find out how to maximise your pension contributions.
- Mobile phone – one mobile phone provided to an employee is free from income tax so long as the contract is in the employer’s name.
- Electric car charging – costs of electricity to charge electric cars is free from income tax. With tax breaks on installing electric charging points available until 2023 now may be the time to take the plunge.
- Cycle to work – bicycles and safety equipment can usually be provided tax free, where the benefit is available to all. In addition, the bicycle needs to be primarily used for qualifying journeys e.g. home to work.
- Free or subsidised staff canteens – so long as available to all staff.
- Eye tests, health screening, and medical check-ups – but not the provision of medical treatment.
- Parking – the cost of a parking space at or near work should be tax free.
- Home working allowance – tax free reimbursement of up to £6 per week where employee required to work from home.
- Annual staff functions (e.g. Christmas/summer parties) – tax free where open to all staff and no more than £150 (incl. VAT) per head.
- Long service awards.
- Training and development courses – where cost paid by employer and job related.
- Mileage allowance – covering cost of journeys made in employees own vehicle. Generally, tax free where employee is reimbursed at HMRC approved rates.
- Trivial benefits – tax free where cost is under £50, not in the form of cash or a cash voucher, not given in return for work done and total trivial benefits to an employee are less than £300 in a year.
- 0% loans of up to £10k – e.g. season ticket loans.
- Equipment such as laptops & tablets – so long as justifiable as necessary for the employee to carry out their work.
That’s it, 15 tax free benefits to offer your employees.
As always, if you have any questions or would like to find out more about our small business online accounting services then get in touch, we’d be happy to help.
