insideKENT Magazine Issue 22 - January 2014 | Page 147

BUSINESS

TECHNICAL BRIEFINGS:
BENEFITS IN KIND

Is a benefit in kind ever tax free?
A benefit in kind can be a valuable addition to an employee’s overall
remuneration package and a differentiating factor in recruiting and retaining
staff. On the other hand, an ill-conceived benefits package can result in a
significant increase in tax for employees and it is worth employers being aware
that there are a number of benefits that can be provided to employees
without any tax liability arising on either the employee or on the employer.
Below are some of the main tax free benefits available:
Annual Parties or Functions
Functions such as Christmas parties or annual dinner dances can be
provided tax free to employees provided they are generally open to all staff
and the cost is no more than £150 per head. Employers can provide more
than one function in the tax year provided the total cost of these functions
does not exceed that limit.

Free or Subsidised Meals
There is no taxable benefit where free or subsidised meals are provided to
all employees on the employer’s business premises or in any canteen. The
exemption also applies if tickets or tokens are provided of which the
employee can exchange for a meal.
Workplace Nurseries
No taxable benefit arises in respect of places in nurseries or play-schemes
on premises made available by the employer, or if run jointly with others,
on premises made available by one or more of those others. This is providing
the employer participates in managing and financing the provision of care.
Childcare Vouchers
Qualifying childcare vouchers up to specified weekly amounts are not
taxable although any excess above the exempt amount will be taxable. The
conditions to be met are complex and for employees joining a scheme from
6th April 2011 the specified amount also takes account of the
employee’s relevant earnings.

Parking Spaces
The provision of a car or motorcycle parking space or facilities for parking
bicycles at or near the employee’s place of work can be provided as a tax
free benefit.
Mobile Phones
The provision of one mobile phone provided by the employer to the employee
including line rental and the cost of any private calls paid for by the employer
is not taxable. The contract must be in the employer’s name and be paid
directly by the employer to be a tax free benefit.
Long Service Awards
If an employer rewards directors or employees for long service, the cost
will not be taxable provided the award takes the form of a tangible article
or of shares in the employing company. The award must be of reasonable
cost (not exceeding £50 per year of service) and the relevant period of service
must be 20 years or more. Also the recipient must not have had a similar
award within the previous 10 years.

Health Screening and Medical Check-ups
The cost of providing an employee with a maximum of one health screening
assessment and one medical check-up in any year is not a taxable benefit.
Neither is the cost of an eye test for an employee using a computer screen
or other VDU.
Removal Expenses and Benefits
If an employee has to relocate as the result of starting a new job or due to
a transfer within an employer’s organisation then, provided certain conditions
are met, the first £8,000 of qualifying removal expenses and benefits will
be exempt from tax and national insurance.
This article covers some of the benefits that may be provided to
employees without any tax liability arising; however, in addition to the above
there are other items in