Angus Brewer Senior Consultant

Are you aware of all the benefits you can provide to employees - completely tax-free?

We’ve covered providing various tax efficient and tax-free gifts in a previous article here and also some more specific practical examples of such gifts can be found here.  

However, what are all the benefits in kind (BIK) that can be provided to employees tax-free?

Some examples of benefits that can be provided to employees with no tax or NIC are as follows:

Type of benefit What is covered
Mobile phones and smartphones Provision of a mobile phone to an employee, or the cost of any line rental or private calls paid for by the employer, provided the contract is in the employer's name.
Bicycles and safety equipment The provision of bicycles and associated safety equipment if the equipment is made available to all employees (not all employees actually have to take up the offer) and used mainly for "qualifying journeys" (travel between home and the workplace, or between workplaces). More on the Cycle to Work Scheme here.
Parking The provision of a parking space (for a car, motorbike or bicycle) at or near the employee's place of work
Free or subsidised meals (e.g. free staff lunches) Free or subsidised meals, or a ticket/token to obtain such meals, if these are provided for all employees
Health screening and medical check-ups Expenses of providing employees with a maximum of one health screening assessment and one medical check-up a year. The exemption does not cover medical treatment, though employers may pay up to £500 towards medical treatment tax-free, if the employee has been absent from work due to illness for at least 28 days and the treatment has been recommended to assist the employee's return to work
Relocation/removal expenses Subject to certain conditions, removal or relocation expenses of up to £8,000 per move may be funded, tax-free, by the employer
Electric car charging The costs of providing the electricity, including the cost of providing 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
Work buses, or subsidies to public bus services An employer provided bus can be tax-free, if the bus is available to all employees and has a seating capacity of nine or more.  Or if employer pays a subsidy to a public bus service.
Eye test and glasses Where an employee uses a visual display unit (e.g. computer monitor/screen) eye tests and corrective glasses are not taxable if a test is required to use the monitor/screen, and if the glasses are specifically for monitor/screen work
Incidental overnight expenses Payments to employees for personal expenditure, up to certain limits, when employee stays away from home for at least one night during a business journey. E.g. laundry, newspapers etc. More info here
Home working allowance A reimbursement for additional household expenses related to working from home, such as gas and electricity.  There is currently a tax-exempt limit of £6 per week or £26 per month.  More information can be found here
Pension contributions Contributions paid by an employer into a registered pension scheme for the employee
Make sure you are taking advantage of all the benefits you can provide to employees tax-free!  This will give them more cash (ultimately) in their pockets, as well as saving employers national insurance costs. Feel free to contact us if you have any questions.

Please note: This report is provided for information only and was correct as at time of writing (04/05/21). Lists and details provided above are not exhaustive and not intended to be full and complete tax guidance.  No action should be taken without consulting detailed legislation or seeking independent professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this article can be accepted.