TAX FREE SOUNDS GOOD, RIGHT?

Let’s face it, we are likely to be heading into a recession pretty soon (we might already be deep in recession and only hindsight will tell us otherwise).

This will only mean one thing – salary hikes are going to be a challenging conversation over the next 6-12 months given companies will be looking at cutting back on spend.

To help with these tough chats, which expenses and benefits can you give tax free to keep your people motivated and offer extra support in the current economic climate?

Share options will be one angle to boost staff retention but below we detail a few expenses and benefits that you can give completely free of tax and NIC!

There are a few conditions (as usual with tax) attached to be able to provide them this way, but they can be an easy way to give more to your employees inexpensively.

Here goes:

FREE OR SUBSIDISED MEALS

Yes free (or even discounted) food and drinks. However, make sure it is at your office / premises and available to all staff. No one gets left out!

Did you know? This can apply to hotels, catering businesses etc – but here, there are more conditions!

TRIVIAL BENEFITS

Give a gift to your employees that costs no more than £50! A few hurdles to get over – the key ones being, it can’t be cash, can’t be a reward for doing their work and they can’t be contractually entitled to it. No limit to the number of gifts an employee can get (make sure they’re not connected).

FYI Special limits apply if the director who receives the benefit is in a close company.

EMPLOYER CONTRIBUTIONS INTO A PENSION

An obvious one for sure.  But still a favourite. Employer contributions are not taxable on employees if they are within certain limits.

Check this out Why not offer pension contributions through salary sacrifice too? It can generate annual cost savings for both the employee and the business. More information can be found in our Autumn 2022 Scoop! [Link]

OVERSEAS MEDICAL TREATMENT

Fingers crossed it’s never needed! But if it is, you can pay for the cost of necessary medical treatment abroad for your employees if they become ill or get injured while working for you abroad.

Good to know Medical insurance abroad is also non-taxable.

HEALTH SCREENING AND CHECK-UPS

Sticking with health – you can provide your employees with one health screening and one medical check-up a year

This doesn’t cover medical treatment, but you can cover treatment if they are absent from work for at least 28 days and the treatment is recommended to help them get back to work.

Did you know? You can provide eye tests and corrective glasses where employees use a computer for work (technical term alert – Visual Display Unit).

TRAINING (AND RE-TRAINING) COSTS

Work-related training paid or reimbursed by you. This covers a wide range of practical or theoretical skills and competencies the employee is likely to need in their job.

BETTER THAN A WATCH

Want to reward employees who have worked for you for at least 20 years? You can give them a gift to celebrate the occasion if they have:

• Worked for you for a least 20 years
• Haven’t had a long service award in the previous 10 years and
• The cost of the award doesn’t exceed £50 per year of service (20 years x £50) £1,000!

FYI Predictably, the award can’t be cash.

ELECTRICITY FOR COMPANY CARS AND VANS

Why not provide electricity, including the cost of a charging point at the employee’s home for a company car or van? The cost of providing the electricity is only free from tax if the employer pays for all the electricity directly.

Note Thinking about reimbursing the employee for electricity costs? HMRC expect it to be subject to tax and NIC on the full amount, leaving the employee to ask for tax relief directly from HMRC on business journeys.

Another option is for you to pay the advisory electricity rate on business mileage, which can be done free of tax and NIC.

MOBILES

Provide your employee with one company mobile phone. The contract must be in the business name

Ring the changes If you allow employees to make private calls on the device, it is still non-taxable!

CHRISTMAS AND OTHER PARTIES

You can put on an annual event for your employees such as a Christmas, summer party. Make sure it is open to all employees and costs no more than £150 per attendee (inc VAT).

Something to celebrate This can include a virtual annual event too, considering the pandemic.

SPORTS RELATED

If your employees are gym bunnies – you can provide them with sports facilities like an in-house gym, free of tax. However, before you sign them all up, one of the key conditions is that the gym can’t be open to the public! Colleagues only.

WELLBEING

Quite simply, you can provide welfare counselling to employees, if it’s open to all employees on similar terms.

Check this out It doesn’t extend to medical treatment, finance, legal or tax advice. It does extend to debt counselling though.

BIKES AND CYCLING SAFETY GEAR

You can lend or hire bicycles (and cycling safety equipment) to your employees. It must be offered to all employees; they must use the bike for mainly travelling to and from work.

Gearing up Family members using the bike too, doesn’t remove the favourable tax treatment.

And remember If the bike is given to employees to keep, it may trigger a tax charge, so best to discuss it before entering into any agreement with them to keep a bicycle.

DISCOUNTED GOODS

Who doesn’t like a bargain? You can sell goods to your employees such as clothes, products etc at a significant discount. However, make sure they pay at least cost price otherwise it becomes taxable.

Worth knowing Cost price may include much more costs that you initially thought.

WORKING FROM HOME

Are employees required to work from home? Instead of a pay rise, why not consider paying a working from home allowance completely tax free!

You can pay them up to £6 per week / £26 per month if it’s under agreed flexible working arrangements. No supporting evidence of cost needed!

Remember This is different from claiming tax relief from HMRC, which many employees did throughout the pandemic directly with HMRC.

TAX FREE AND NOT TAXING. INTERESTED IN HEARING MORE?

If you are interested in how to provide these to your employees and many more and wondering whether you meet all the conditions. Reach out to your usual CP contact or Nathan Woollery below.