24 Tax Free Payments You Can Make To Employees

A mobile phone can be provided to an employee, but the contract must be in the employer’s name and limited to one per household. It can have unlimited calls/texts, but you may wish to set a limit on use or request contribution for private calls.

can be provided to an employee, but the contract must be in the employer’s name and limited to one per household. It can have unlimited calls/texts, but you may wish to set a limit on use or request contribution for private calls.

If it is justified for work purposes as necessary for an employee to perform their job properly, you can supply an employee with a PC, tablet or laptop.

You can loan employees a bicycle and/or cyclist’s safety equipment, providing the employee uses it for work, or getting to and from work. You can reclaim VAT and obtain capital allowances on cost.

Subsistence – Refreshments may be provided on a reasonable scale during working hours. Meal vouchers may be provided for up to 15p per day (I know….15p?!? My mind boggles too!)

If your employees travel for work, then you can provide subsistence costs for food and drink related to work travel, however this must be reasonable. As an alternative to employees keeping receipts for everything and reclaiming it, you can pay them a set rate for meals while they are away.

Annual Parties – There is an allowance of £150 per head, plus partners, for annual parties and functions. However, it should be noted that this is for entertainment throughout the whole year. If you exceed £150, then you will have to declare it as a benefit and employees pay tax on the whole lot.

For ‘trivial’ gifts & benefits, you don’t have to pay tax on a benefit for your employee if all of the following apply:

1. a) it cost you £50 or less to provide
2. b) it isn’t cash or a cash voucher (a voucher that can be exchanged for cash)
3. c) it isn’t a reward for their work or performance
4. d) it isn’t in the terms of their contract

Free Parking – simple way to make your workplace more convenient and appealing to employees is to offer free vehicle parking at work.

Interest-free borrowing (beneficial loan up to £10,000) could help employees manage short-term financial needs without additional costs. Loans over £10,000 would have interest chargeable or a benefit in kind paid.

Making employer contributions to your company or employee’s own pension scheme is a great way to enhance long-term financial security for your employees.

Providing support for employees with pensions advice (to the value of £500), shows your commitment to their financial well-being and planning. The first £500 spent with a professional advisor is tax free.

Training and course fees are tax-free if you provide job-related training. Investing in your team’s development boosts skills and motivation.

Use of home as office – £6 per week can be paid for homeworking to cover additional homeworking costs like heating or electricity – this is the standard rate claimable by employees that work at home regularly. Ask them to complete form P87 or add it to their tax return.

Medical and optical check-ups – General check-ups as part of employer policy benefits both employer and employee ensuring a healthier, more productive workforce.

A pool car can be provided if the car is genuinely only used for work and left at the premises. It’s a useful option for teams frequently travelling for business purposes but must be left at the premises and be available for all team members use.

Low benefit-cost on a low emission car. Company cars are a great perk but the cost of these in tax is prohibitively expensive. An electric or low emission car is a great alternative.

Low benefit-cost on a low emission van. Opting for low emission vans helps reduce the environmental impact while offering tax advantages.

You can provide a van for commuting may be provided for work and just used for ordinary commuting. This is particularly beneficial for roles requiring regular transport of tools or equipment.

A personal number plate may be included with a company car. Adding a touch of personalisation can make the car feel like a valued perk.

Up to £8,000 may be reimbursed to an employee for relocation expenses, which can help ease the financial burden of relocating and make the transition smoother for employees.

Staff Suggestion Schemes allow you to award employees for suggestions that benefit your business. Up to £25 can be given tax-free for a good suggestion or special effort and up to £5k tax-free can be given if financial benefit will be achieved by your business. Recognising contributions fosters innovation and keeps employees engaged.

You can support electric vehicle users, whilst also promoting sustainability, by offering workplace charging facilities for electric vehicles (from 6 April 2018).

Long service awards can be made to those with at least 20 years of service. These must be a tangible article, not exceeding £50 for each year of service. A thoughtful way to show appreciation for loyalty and dedication.

Offering Life assurance policy premiums that provide an employee with death benefits provides peace of mind for employees and their families.