I want to put in place measures to incentivise my staff. What options are available to me that I can use to incentivise staff but also maintain tax efficiency?

Peninsula Team

March 31 2013

There are numerous options available to employers wishing to offer their staff tax efficient benefits, some of which are listed below.

An employer can provide meals in a staff canteen and it will not be regarded as a taxable benefit by HMRC. This is provided that the benefit is available to all employees on comparable terms, i.e. there cannot be measures in place so that a Director or senior members of staff is entitled to a higher ‘allowance’ with regards to the meals provided than other staff. Also this benefit should not be provided as part of a salary sacrifice.

Awards granted under a formally constituted staff suggestion scheme will not be regarded as a taxable benefit. The suggestions have to be related to the trading activities carried on by the employer. So, if an employer was to offer an employee tickets to a concert for a suggestion made by an employee on how to improve their credit control, this would be a tax free benefit for the employee in question. This is provided that all employees were able to offer a suggestion and a meeting was not held for the purpose of proposing suggestions.

An employer can provide recreational facilities for use by their staff and it will be exempt from tax. Although this exemption does not apply where the employer reimburses or pays an employee’s subscription to a gym, nor does this exemption apply if the benefit is only available to a select few employees.

The first £55 per week of employer arranged childcare or childcare vouchers is tax free. The childcare must be provided by registered carers. Higher or additional rate taxpayers who use employer supported childcare schemes are limited to £28 and £24 per week tax free respectively.

Other tax free benefits include the provision of eyesight tests, the provision of one health screening or medical check-up per year, the private use of one mobile telephone provided by the employer during the course of business. Finally the provision of work buses with a seating capacity of 9 or more used predominantly to bring employees to and from work will also not be regarded as a taxable benefit.

Further assistance is available via our specialist tax advisors on 01455 852550.


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