Tax Exempt Benefits for Employees

An overview of some of the more common benefits that can be provided tax free to your Directors/employees:

Pension

The employer can make pension contributions for the employee as long as it is reasonable and in line with the nature of their employment and not out of proportion. There is an annual combined limit for employee and employer gross contributions combined of £40k.

Mobile Phone

The cost of all calls and line rental for one mobile phone per employee providing the phone contract is with the employer and paid by them. Caution: any payment by your employer for use of a personal mobile phone is a taxable benefit and similarly the cost of any phone costs for a member of an employee’s family is taxable on that employee.

Annual Event

Christmas parties or similar annual events which are open to all staff and cost no more than £150 per head in total per year to provide. Caution: if it cost £150.01 then the whole amount is taxable on the employee.

Health Screening

The cost of providing an employee with one "health screening assessment” and one "medical check up” a year. A Health Screening Assessment means an assessment to identify if you are at particular risk of ill health. A medical check up means a physical examination by a medical professional to assess the employee’s state of health. The exemption does not apply to the cost of any medical treatment.

Payments towards household costs for home working

Payments for reasonable additional household costs due to home working are exempt. The employer can pay up to £4 a week without the need for supporting evidence. More can be paid where supporting evidence is provided – your Accountant will normally work out a reasonable Use of Home as Office amount.

Childcare Vouchers

Qualifying childcare vouchers of up to £55 a week (basic rate payer) or £28 a week (higher rate payer) are exempt. The scheme has to be available to all employees and must be for registered or approved childcare eg OFSTED registered nurseries, playgroups, childminders or even tuition where the tutor provides childcare at the same time as the tuition. Obviously the suppliers must be happy to accept the vouchers. There is admin involved in this so discuss with your Accountant if interested.

Long Service Awards

Where Director or employee service is 20 years or more and no such award has been given in the last 10 years the cost of an article costing no more than £50 for each year of service.

Bicycles and cycling equipment

A bicycle and safety equipment lent to an employee by the employer provided they are available to all employees and the main use is for home to work travel or between workplaces.