Tax Free Benefits in Kind

17th December 2019

Certain benefits in kind still remain entirely tax free, and can be used in flexible remuneration and/or salary sacrifice situations:

  • Employer pension scheme contributions (up to £40,000 per employee per annum, plus potential ‘catch-up’ from previous 3 years. This assumes your personal income is not above £100k, you are not already drawing benefits from a private pension and your previous contributions have not exceeded your lifetime allowance).
  • Childcare vouchers or employer supported childcare (up to £55 per week, depending upon personal tax status),
  • Provision of a company vehicle:
  •     –  For pool use on business related travel only.
  •     –  If a van (including a twin cab pick-up), for use:
  •     –  For business related travel,
  •     –  For ordinary commuting to and from work,
  •     –  Insignificant private use.
  •     –  With effect from 6 April 2020, for business and private related travel, if zero emissions (eg a newly registered Tesla).
  • Use of a bicycle for mainly home to work commuting and other business use, which is available to all employees,
  • Mobile phones, for both business and private use, where the contract is between the employer and the supplier,
  • Interest free loans of less than £10,000 throughout the year,
  • Free or subsidised meals provided on the employer’s premises, which are available to all staff,
  • Expenses incurred in the provision of any death in service life assurance lump sum, gratuity, or similar benefit given to an employee or to any member of the employee’s family or household on the employee’s death (no longer capped at x 4 salary),
  • Places in nurseries on premises made available and managed by the employer,
  • Contributions towards ‘Use of Home as Office’ (£4 per week without the need to keep supporting evidence of cost),
  • Contribution towards incidental overnight expenses (£5 per night UK, £10 per night overseas), when you stay away from home for at least 1 night on a work journey,
  • Job related living accommodation,
  • Trivial benefits (not exceeding £50 individually, or £300 pa in total to directors of close companies), including a small gift in recognition of a particular event (eg marriage or birth of child), a seasonal gift (including non-cash vouchers) or provision of free tea and coffee.
  • Long service awards, for those with over 20 years service, where the cost does not exceed £50 per year of such service (up to a maximum of £1,000),
  • Awards to employees under formally constituted suggestion schemes (up to £5,000),
  • Provision of a parking space at or near the employee’s place of work,
  • Provision of subsidised public road transport to and from work, which is available to all employees,
  • Christmas or other annual parties where the cost to the employer does not exceed £150 per attendee (ie £150 each for employee and partner),
  • Sports facilities or gym made available to employees which are not available to the general public,
  • Certain work related training expenses,
  • Removal expenses resulting from a change in job, up to the first £8,000,
  • The personal use of an employer’s computer, in certain circumstances.
  • Guaranteeing a personal debt.
  • Approved share options.
  • Using the business purchasing power to obtain discounted personal goods/services, which are reimbursed by the individual.
  • Mileage allowance not exceeding HMRC approved rates for business related travel.
  • Discounted employer goods or services or free access to employer facilities.
  • Health screening or check-ups.
  • Work-to-home travel when working late.
  • Counselling.
  • Shareholder advice in relation to buying the company’s own shares.
  • Retraining provision for redundancy.
  • Support for commuting for disabled staff.
  • Gifts received by the employee from third parties (eg customers).

Some minor and irregular benefits in kind (eg gifts and vouchers over the tax free amounts, the cost of spouses attending an overseas event, use of a company holiday flat) can be given, not tax free, but structured so that the employer pays the tax, rather than the employee, under a PAYE Settlement Agreement.

 

Although not classed as benefit in kind, shareholders can each also be paid dividends up to the dividend allowance each tax year (£2,000 for 2019/20) tax free.

 

As with all exemptions provided under statute or extra statutory concession, care is required to ensure that the actual circumstances fall within the precise criteria laid down. Our tax team are able to assist clients in structuring transactions to fully utilise these ever-diminishing tax exemptions.



 
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