Tax free benefits

 

Tax free employee benefits

There are various types of benefit payments you can make to employees and directors which are exempt from tax and National Insurance Contributions (NICs). By paying your employees a lower salary and more tax free benefits, there are significant savings that can be made for both the employee and the employer. For the tax year 2018/19, examples include:

  • Business mileage
  • Childcare vouchers
  • Business related expenses
  • One mobile phone per employee
  • Staff parties (£150 per person per year)
  • Bicycles and associated safety equipment
  • Benchmark scale rate subsistence payments
  • Free or subsidised meals available to all employees
  • Employer's contributions to a registered pension scheme
  • Incidental overnight expenses (£5 per night in UK; £10 abroad)
  • Periodic medical checks and eye tests for employees who use computers
  • Working from home costs (up to £18 per month without the need to keep records)
  • Trivial benefits made to employees/directors (£50 per item, but an annual cap of £300 for directors)

Further guidance

Further information about employee expenses and benefits can be found on the HMRC website:

> HMRC - expenses and benefits

 

Disclaimer

This information is not meant as a substitute for professional advice and by no means covers every scenario. Almost every rule described here will be subject to many exceptions and caveats. Tax legislation is extremely complex and can be difficult to understand. You should discuss your circumstances with a qualified professional before acting on any information contained within this website. Tax legislation is constantly changing and the information contained within this website is written from our current understanding and interpretation of the tax system as of 6 April 2018.

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