HR, Tax & Admin, Work & Wellbeing

Which Employee Benefits Are Tax Free?

Business Advice | 10 August 2023 | 10 months ago

As an employer, it’s important to provide employees with a wide range of workplace benefits. There is no perfect number regarding how many benefits you should offer, but it’s usually best to provide as many as you are able to. After all, employees will utilise different benefits, depending on what appeals to them. These employee benefits can range from free lunches when employees are in the office to professional training schemes and courses, some businesses even offer money towards home working setups and childcare vouchers.

Which Employee Benefits Are Tax Free?

Employee benefits are aimed at improving the work life of an individual. They are there to enhance an employee’s wellbeing and job satisfaction, whilst improving their financial security. They are also a fantastic way to showcase your business as being a good place to work, somewhere that values the happiness and wellbeing of its staff. When it comes down to choosing between two attractive roles, good employee benefits could be all it takes to sway someone into choosing your business.

When employees feel valued and supported by their employer, they are more likely to be loyal to the company and committed to its success. This can result in higher levels of employee engagement and a stronger sense of company loyalty. Though employee benefits do come at a cost to the business, many of them are tax free. Here are some common tax free employee benefits.

 

Canteen Meals

There are a range of advantages to providing canteen meals to employees. It’s a way to promote loyalty, to create a sense of belonging and to ensure employees are eating healthy, nutritious and balanced meals throughout the work day. It can even promote teamwork and productivity. It’s one less thing for employees to think about during the day, enabling them to focus on deadlines and tasks, and not the lunch they’ve left at home.

 

Parking

For employees who drive to work, parking can be a concern. Not just finding somewhere to park, but covering the cost of paid car parks, as even a few pounds a day quickly adds up. To make the commute a lot less stressful, many businesses choose to cover the cost of parking. The provision of a parking space – whether that’s a space for a car, bike or motorcycle – can be offered as a tax free employee benefit, as long as it’s at or near the workplace. The cost of providing electricity to charge electric cars is also exempt, including the cost of installing the charging point itself.

 

Training

A lot of businesses focus on the ‘fun’ tax free employee benefits, such as canteen meals and mobile phones, the benefits that appeal to employees on a day-to-day basis. Though these are beneficial and enticing for an employee, they don’t enhance a person’s future career and professional progression. This is where training comes in. Work-related training is a tax free employee benefit, and there is a broad range of training options that are included. There are a variety of practical and theoretical skills, qualifications and competencies that an employer can offer as an employee benefit. Training benefits the employee’s future career progression, whilst benefiting the business by ensuring staff are skilled and competent.

 

Health Screenings

A lot of businesses choose to provide medical and dental benefits to employees, including private healthcare or access to wellbeing programmes, some of which are tax free. Employers can provide employees with one health screening assessment and one medical check up per year, as a tax free employee benefit. Though this exemption to tax doesn’t cover medical treatment, employers can pay up to £500 towards treatment tax free, as long as the employee has been off work for at least 28 days due to illness. The required medical treatment must also be the recommended course of action to help their return to work.

 

Childcare Vouchers

Childcare is a cost that a lot of employees struggle with – in fact, some employees struggle to keep up with full time working hours due to the cost of childcare – but businesses can provide help as a tax free employee benefit. There is an exception of up to £55 a week for the provision of childcare vouchers, which can significantly reduce how much a parent is paying during their working hours. This is also the case if the business contracts a commercial nursery to provide qualifying childcare to employees. There is also a Tax-Free Childcare scheme offered by the government, which also helps parents to stay in the workplace by making childcare more affordable.

 

Mobile Phone

A lot of businesses provide employees with a mobile phone, to be used for work related communications. This is a common tax free employee benefit, one that benefits both the employee and employer. Employees don’t have to worry about using their own mobile phone contract, and the corresponding data, for business purposes. Plus, employers can relax knowing that employees always have access to an adequate device should they need one.

 

It’s important that businesses don’t underestimate the importance of employee benefits. Though they can be a costly offering for a business, the benefits far outweigh the financial side of things. Employee benefits play a key role in attracting, retaining and motivating employees, while also contributing to their overall wellbeing and satisfaction at work. A strong benefits package can lead to a more engaged and productive workforce, positively impacting employees and employers alike.

 

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