Providing a simple way of remunerating your employees and to
reward them for loyalty can create an administrative headache. Finding the most efficient way that does not
result in a PAYE tax or National Insurance liability for you or them can take
up your valuable time.
Q: What can I provide
without creating a liability?
You can provide a Company Mobile Phone…
…but the contract has to be between the company and the supplier, and the payment must come out of the Company bank account. Private calls and data allowance for that phone paid directly by you as the employer will be tax-free. Estimated value of this could be upwards of £100 per tax year.
Providing a mobile phone to an employee’s family member is taxable
unless that person is also an employee of your company. Also, money
you pay to an employee to use their own phone is also taxable.
You can offer a Workplace Parking space…
…workplace parking includes any space at or near the workplace for cars, motorcycles and bicycles no matter what the arrangement, so the benefit can be offered tax-free if you:
- Provide physical spaces at or nearby
- Provide cash, tokens or non-cash vouchers
- Reimburse the expenses incurred by the employee
This is also tax-free if the employee uses the space at the weekend. Estimated value of this could be upwards of £1,500 per tax year.
You can provide Fee or Subsidised Meals…
…provided that you meet the following 3 conditions you can provide free or subsidised meals on your business premises tax-free.
- Meals are provided or a ticket or token is used
to obtain meals by staff generally, and
- The meals are provided on a reasonable scale,
- All employees have the opportunity to obtain
free or subsidised meals and those employees who meals are not provided are given
Where meals are provided in conjunction with salary sacrifice or flexible remuneration arrangements the exemption is prevented from applying. The exemption is also not applicable if it involves elaborate meals and
You can arrange for Medical Check Ups…
…a maximum of one health screening assessment and one medical check-up per tax year are free of tax. Estimated value of this could be upwards of £250 per tax year.
The tax exemption does not cover medical treatment.
You can provide Sports or Recreational Facilities…
…such as gyms, clubhouses, playing-fields or courts for your employees and members of their families and households. However, the exemption does not apply here the facilities are also available to the general public.
You can provide Welfare Counselling Services…
…the counselling service must be for welfare issues, such as bereavement, ill health or stress, problems at work, sexual abuse or personal relationship difficulties and available to all employees.
Welfare counselling does not include any medical treatment, advice on
finance or tax, other than debt counselling, advice on leisure or
recreation or legal advice.
You can sell Company Goods or Services at a Discount…
…but not give them away for free.
You can Pay a Home Working Allowance…
…if an employee needs to work from home you can reimburse the employee for additional house-hold expenses incurred such as gas and electricity. You can pay up to £216 a year and the allowance will automatically be exempt from tax.
The exemption does not apply if the employee simply takes work home
in the evenings.
You can Make a Long Service Award…
…and is an effective way of recognising and employee’s contribution over a long period of time. If you want the award to be tax-free you must meet the following conditions in full:
- The employee has been in your employment for at
least 20 years
- No other reward has been made to the recipient
in the last 10 years
- The award does not exceed £50 for each year of
the employee’s length of service, e.g. if the employee has 20 years’ service
the maximum award must not be greater than 20 x £50 = £1,000
- The award must take the form of tangible
moveable property or of shares in the employing company.
You can offer an Interest Free Loan…
…there is no maximum loan amount, however if the loan is to purchase an annual travel season ticket, the loan amount cannot exceed the actual purchase price of the rail or coach ticket.
Directors are allowed an interest-free loan from the Company for any reason up to £10,000. The loan must be repaid in full within 9 months of the end of the Company’s accounting period end, otherwise the Company will be liable for a tax charge.
If you are considering any of these scenarios and you would like advice, or you wish to discuss your payroll requirements please call us on 01495 806610 or contact us here.
Source: Pay & Benefits Adviser