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Tax-Free Company Payment and Benefits for Employees

Are you working as an employee and having payment and benefits from your employer? Do you know that all payment and benefits are not always taxable? In this article, we will explain the most common tax-free payment and benefits for employees here in the UK.

The most common tax-free company payment and benefits

Here are the most common tax-free payment and benefits just a guidance as follows, but not a complete list:

  • The meals in employer’s business premises or staff canteen, hot drinks, and water at work.
  • Costs for the mobile phone provided by your employer.
  • Parking space or facilities for car, motorcycle, and bicycle at or near the workplace.
  • Up to 60 journeys in each tax year for “work to home travel” when you are working late. Normally, this is taxable benefits if employer provide the cost for travel between home and regular workplace.
  • Any number of events (the £150 limit per head in each tax year for all events) including Christmas party, summer event and annual party.
  • Trivial benefits like birthday gifts, marriage anniversary presents (not in the form of cash or cash voucher and work recognition) that costs less than £50 per benefit. There is no limit in the number of trivial benefits in a year that employee receive, except the annual cap of £300 for the director in a close company.
  • Qualifying business expenses that “wholly and exclusively” for the business.
  • Living accommodation (job-related) that requires for the business to perform the duties.
  • Employer pension contributions to their employees withing certain limit of annual allowance and lifetime allowance.
  • Medical treatment abroad is to cover the costs of necessary medical or the cost of providing medical insurance for such treatment.
  • One health screening and one medical check-ups in a year to identify employees who might be at particular risk of ill-health.
  • Incidental overnight expenses when you are away during business journeys (£5 per night anywhere in the UK and £10 per night outside the UK).
  • Work related training costs including training fees, examination and certification costs, travel and subsistence costs for training.
  • Long service awards to directors or employees where the service is not less than 20 years, and no similar award has been made to the same employee within the previous 10 years. The award should be things or articles, rather than cash and should not exceed £50 for each year of service
  • The most counselling costs are tax-free benefits in connection with the termination of employment.
  • Up to a maximum of £8,000 per move is to cover the costs of removal or relocation for your new job or transfer to new workplace.
  • Business mileage allowance within certain limits and your employer pays you.
  • Home working allowance of up to £6 per week or £26 per month when you are working from home and your employer gives this allowance to cover your additional household expenses.

Please note that this article for just information purpose. You should ask your advisor to have specific requirements or check HMRC website for more details.

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