• Katie Bunting

Taxable Benefits

Payments made on behalf or to employees fall under two categories: taxable and non-taxable. Knowing the difference can save you and your employees tax. Please see below for examples of employee expenses that are usually non-taxable, therefore they need to put on a P11D form at the end of the tax year or can be added to payroll - something called Payrolling Benefits.

Taxable Benefits and Facilities include:

  • the provision of living or other accommodation, including lights, heat, rates and domestic or other services

  • the use of any asset provided by the employer or another person acting on the employer's behalf, for example, the use of a motorcycle, an aircraft or yacht,

  • the provision of fuel for private motoring in a provided car

  • gifts of assets to the employee, or the sale to the employee of assets at less than their market value (this applies not only to assets such as a car or a house, but also to goods such as clothes, TV sets, wines or groceries)

  • any non-exempt expenses or liabilities incurred by the employee and paid direct by the employer, for example, hotel or restaurant bills

  • Income Tax not dedcuted from employment income paid to a director, but paid to HMRC by the employer and not reimbursed by the director

  • scholarships awarded to students by reason of their parents' employment

  • hotel accommodation and restaurant facilities arranged by the employer

  • holidays and childcare

  • shooting, fishing and other sporting facilities

  • work carried out at the employee's residence

Benefits to which special taxing rules may apply:

  • cars and vans available for private use

  • loans

  • certain arrangements in connection with share incentive schemes

  • scholarships

  • tax not deducted from employment income paid to directors

  • certain arrangements for providing employment income through third parties

For a list of non-taxable supplies please see our blog post linked below:

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