Payments and Benefits which are not taxable

Your company may provide you with benefits or reimburse expenses to you, but certain expenses are not always taxable.

Generally, these will be covered by a statutory exemption or extra- statutory concession- you do not have to pay tax or NIC on benefits and expenses covered by concessions or exemptions and therefore there is no need to include them on your tax return.

The key exemptions are as follows:

Trivial Benefits

From 6 April 2016, broadly any benefit costing less than £50 will not be a benefit in kind provided that:

  • the benefit is not in the form of cash or a cash voucher;
  • it is not given in recognition of work done (or to be done) by the employee; and
  • the total value of trivial benefits for that employee is less than £300 for the tax year.

Medical treatment abroad

The cost of necessary medical treatment abroad paid for by your company, or paid by you and reimbursed to you by your company, where you fall ill or suffer injury while away from the United Kingdom in the performance of your duties. The cost of providing insurance for you against the cost of such treatment is also non-taxable.

Health screening and medical check-ups

Expenses incurred in providing you with a maximum of one health screening assessment and one medical check-up in any year.

‘Health screening assessment’ means an assessment to identify employees who might be at particular risk of ill-health.

‘Medical check-up’ means a physical examination of the employee by a health professional for, and only for, determining the employee’s state of health.

Employer-funded or employer-reimbursed training

This exemption covers the costs borne by your company of work-related training within the whole range of practical or theoretical skills and competences you are reasonably likely to need in your present or likely future jobs with your employer. The exemption extends to:

  • training activities such as first aid and health and safety in the workplace;
  • employee development schemes;
  • activities intended to develop skills you need in leadership;
  • any training that is provided by a third party rather than your employer.

. Any asset provided to you or for your use is also taxable unless the asset is provided or used purely for training, or for training coupled only with use in the performance of the duties of your office or employment.

Christmas or other annual party

This includes annual parties or alternative functions of a similar nature, such as a Christmas dinner or a summer party, which are open to staff generally and which cost no more than £150 a head in total to provide.

Mobile phones and smartphones

There is no charge to tax on one mobile phone provided to you, or any line rental or the cost of any private calls for that phone paid for by your employer. The contract needs to be in your company’s name.

A mobile phone provided to a member of your family or household is taxable in all circumstances, unless the family or household member is provided with the phone as an employee in their own right.

If an employer provides a mobile phone to you solely for business use, and private use is not significant, there is no charge to tax. Consequently, it is possible for an employer to provide two, or more, mobile phones without creating a tax charge, if one or more is provided solely for business use – and private use is not significant – and only one is provided for private use.

But if two mobile phones are provided for private use, or for mixed private and business use, only one is exempt. It is up to you and your employer to decide which one is exempt and which one is chargeable as a benefit.

Smartphones fall within the meaning of mobile phones.

HMRC accept that the provision of one such device to an employee can be exempt from a benefit in kind charge even where there is private use. This exemption does not extend to other devices such as iPads, PDAs and tablets.

Bicycles and cycling safety equipment

If your company lends or hires bicycles or cycling safety equipment to their employees, the exemption applies if:

  1. the bicycles or equipment are available to all employees – this does not mean that every employee has to be provided with a bicycle or equipment, just that the offer of cycles or equipment is open to all employees if they wish to take it up;
  2. the bicycles or equipment are used mainly for ‘qualifying journeys’ as described below.

    A journey only counts as a qualifying journey in two situations:
  • if all or part of the journey is between home and workplace;
  • if all or part of the journey is between workplaces.

Other use of the cycle, for instance pleasure use or use by members of your family will not disqualify the exemption provided that the other use is not the main use of the bicycle.

Removal expenses

Your company can meet your removal or relocation costs, up to a maximum of £8,000 per move, if certain conditions are met.

The conditions include:

  • you must be moving to take up a new job or assignment;
  • the expenses relate to the sale of your old home, the purchase of your new home, removal costs, travel and subsistence costs or a bridging loan;
  • you must incur the expenses before the end of the tax year following the one in which the relocation occurred;
  • your new home must be within reasonable commuting distance of your new place of work, and your old home must not be within reasonable commuting distance of your new place of work.

The above is not an exhaustive list -The GOV.UK website also contains an A to Z list of expenses and benefits, which explains their  tax and National Insurance contributions treatment.

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