Although the government is continually clamping down on non-taxable payment and benefits for employees, there remains an eclectic list of expenses that are tax exempt.
Some of the non-taxable benefits include the following:
- Annual parties. An annual Christmas party or other annual event offered to staff generally is not taxable on those attending, provided that the average cost per head of the function does not exceed £150. There are qualifying criteria that must be followed to ensure that there will be no taxable benefit charged to employees.
- Equipment for disabled employees. Benefits provided to employees with a disability to help them with their work aren’t taxable where there is private use. For example, a wheelchair or hearing aid.
- Goodwill gifts. Certain gifts received by employees from third parties (such as a gift voucher) are exempt, provided that the total value of the gift made by a donor is less than £250 in any one tax year. In addition, no tax is usually payable on goodwill entertainment provided by third parties (e.g. suppliers).
- Health-screening and medical check-ups. A maximum of one health-screening assessment and one medical check-up in any year can be tax exempt.
- Late-night taxis. An employee, who is occasionally required to work late, can be provided with a taxi home paid for by his / her employer. This taxi ride will qualify for tax exempt status if all qualifying conditions are met.
- Long service awards. Long service awards made to directors and employees as testimonials to mark long service 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 are likely to be tax exempt. The cost of an article must not exceed £50 for each year of service.
There is no requirement for employees to pay tax on benefits and expenses covered by concessions or exemptions, and there is also no need for them to be included on your tax return.