Wednesday, July 29, 2009

Post 101! Tax-efficient employment benefits-in-kind

Wow! I just realised I have made over 100 posts!

On to the next one..................................

Tax-efficient employment benefits-in-kind

There are still some tax free perks available to employees and if you really DO care about your staff take a look at these:-

· Childcare vouchers. Provided the benefit is made available to all employees, vouchers to a value up to £55 per week can be provided to pay for (non-family provided) childcare for employees. This benefit is free of tax and national insurance, and thus provides a significant saving for employer and employee if it is given on a salary sacrifice basis. Care is required in respect of the impact of vouchers on tax credit claims and their continued availability during maternity leave.

· Mobile phones. These can be provided free of tax and national insurance to selected employees, although it may be advisable to cap the level of bills that the employer will meet!

· Medical check-ups. These can again be provided tax and national insurance-free to selected employees.

· The cycle to work scheme allows the tax-free provision of cycles and cycle safety equipment by employers to employees – the facility must be made available to all employees. In theory the bicycle must be mainly for home to work use, but given that employers are not required to monitor the use of bicycles it is difficult to see how this can be enforced in practice.

· The alternative to the above approach is for the employee to provide his or her own bicycle, for which they can be paid a tax and NI-free mileage rate of 20p per mile for business mileage, on a similar basis to the fixed profit car scheme rates of 40p and 25p per mile.

· Before leaving the subject of bicycles, employers can also provide tax-free cyclists’ breakfasts to employees who cycle to work. We have so far waited in vain for the introduction of joggers’ breakfasts and walkers’ breakfasts!

· Pension contributions by employers are in general a tax-free benefit for employees, although the above regime for those with income in excess of £150,000 must now be taken into account in this respect, as well as the annual pensions allowance (currently £245,000).

· Outplacement counselling provided to help employees to adjust to cessation of employment or to find a new job is a tax-free benefit. It is important to note that this can be provided on retirement as well as on redundancy etc.

· Loans of up to £5,000 can be made tax and NI free to employees. This is a de minimis relief, so if the loan exceeds £5,000 the whole loan is subject to an income tax (and employers’ NI) charge, currently based on 4.75% per year of the amount lent. Care also needs to be taken about making loans to shareholders, as these can give rise to a different tax charge under the corporation tax regime.

Are you getting the BEST deal from your accountant? For a FREE report on this subject click here

Hampshire Accountants

Basingstoke Accountants


M said...

Thanks for this Shaun - just posted on my blog about it:

1040 US Tax Return said...

This nice post, as i experienced the 1040 US Tax Return is the best for for Tax planning.

employee benefits said...

Nice Post!! Thanks for drawn our attention towards Tax efficient employee benefits plans. Thanks Again!!