Tax Free Perks

The Government has continuously sought to limit the tax free perks that businesses can provide for their employees. However, there are some remaining. Here is an update on some of those still available.

Childcare

Childcare provision and childcare vouchers up to a weekly maximum (currently £50 per week).

Mobile Phones

There is no benefit in kind on the provision of a mobile phone to an employee. However, this can prove an expensive perk to provide. However, the provision of more than one mobile phone per employee (eg where they are given to family members also) is taxable.

Homeworking Expenses

Employees can be paid up to £156 (2008/9) a year to cover the extra costs of working from home where the employee regularly works at home under a flexible working arrangement. No receipts need to be kept.

Staff Entertainment

The allowable expense for Christmas Parties and other employee functions is currently £150 per head.

Subsidised Canteens

Subject to certain conditions, subsidised canteens create no taxable benefit. Luncheon Vouchers up to 15p per day are tax free.

Subsistence Payments

You can pay employees up to £5 per overnight stay in the UK or£10 if the business trip is abroad.

Transport

It is often forgotten that the use of a qualifying pool car is not a taxable benefit, nor is free parking at the workplace.
Payments for travelling expenses in connection with work can be made according to "scale rates" published by the Inland Revenue. There are separate rates for cars, motorcycles, and bicycles and even for passengers sharing a car.

Loans of Computer Equipment

If provided to all staff and under 2,500 in value, these do not create a benefit in kind.

Share Incentive Schemes

There are a number of share incentive schemes which can be used to provide tax free benefits. Share Incentive Plans allow companies to give up to £3,000 worth of "free shares" each year to employees.

Long Service Awards

These are tax free for employees with 20 years service or more limited to £50 per year not payable in cash.

Employers' Pension Contributions

Payments to approved pension schemes, on behalf of employees, are not taxable.

Interest Free Loans

Loans of up to £5,000 can be made to employees without attracting a tax charge on the notional interest.

Professional Subscriptions

These are not normally taxable when paid by the employer.

Sports Facilities

These are tax free, provided they are available to all employees.

Removal Expenses

The relocation expenses for employees who move in connection with their work can be paid, subject to limits.

Providing tax free benefits in kind can be an excellent way to increase staff motivation and attract and retain key employees. Employers should look at the range of options open to them to tailor attractive remuneration packages for their staff. See HMRC guidance.


Business Link has a useful guide to benefits in kind on its website.

HMRC has a very helpful checklist of treatment of benefits in kind.