What Employee Benefits Are Not Taxable?
In a previous post we looked at checking your PAYE system is correctly set up and which expenses are and are not liable to tax, but there is also a wide range of employee benefits that are not liable to tax which we’ve summarised below.
But as always, even when a benefit is not taxable, take care to record all amounts paid out on employee benefits and record exactly what the payment was for. This way if your business is subject to an HMRC investigation your records can help the tax authorities understand this aspect of your business costs.
So let’s take a look at some of the most common employee benefits that are tax-free:
If an employer provides free (or subsidised) meals to all of its employees on the premises or in a separate canteen solely for staff meals then this is counted as a tax free benefit for those employees.
Free parking at or near the business premises is also a tax-free benefit provided any personal use of the parking facility outside work hours is minimal.
The use of any sports facilities available on the premises, such as a gym.
Cash or vouchers are not included in the classification of small gifts but small items such as chocolates or wine are not taxable.
When an employer pays for standard medical check-ups for staff, this is also treated as a tax free benefit.
Staff parties, including any transport or overnight accommodation, is not taxable provided the costs per head are less than a specified amount (currently £150 per head/annum). Note that the limit is not an allowance and cannot be offset against the cost of more expensive events.