Blog / Staff benefits
Staff benefits and tax: gifts, perks and share schemes
Which staff benefits are tax free and which are not: trivial benefits, phones, health checks, EMI options and employment status, from Simon Jacobs, Chartered Tax Adviser.
When does a gift to staff become taxable?
A staff gift is taxed when it fails a trivial benefit condition and no other exemption applies. Bikes, uniforms, one mobile phone and a yearly medical check have their own exemptions.
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Can your company pay for a medical check-up tax free?
Yes, within limits. HMRC exempts one health screening and one medical check-up per employee in a tax year. Checks connected to medical treatment are not covered.
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Is a work trip with leisure time a taxable benefit?
A purely business trip has no personal tax cost for staff. Where a trip includes non-work activities, the private element can be a taxable benefit, which a PAYE Settlement Agreement can cover.
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Can you give your staff a phone without creating a taxable benefit?
One phone per employee, on a contract in the company's name, is exempt from income tax and National Insurance. Change either of those two facts and the treatment changes with it.
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If your agency has employees, do not miss the £10,500 National Insurance relief
Employment Allowance lets eligible employers cut their employer's National Insurance bill by up to £10,500 a tax year. There is one trap that stops most one-person agencies claiming it.
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Your agency's subcontractors: are they really subcontractors?
A lot of agencies hire subcontractors while treating them like employees. If the reality looks like employment and you are not running payroll, HMRC can come asking.
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How can you give your agency staff a gift without creating a tax bill?
The trivial benefits rules let you give an employee a gift worth up to £50 tax free while the agency still claims the cost. Directors get their own annual cap, and one common mistake breaks the whole thing.
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Want to reward a key employee without a 40% tax hit? Consider EMI options
A £40k bonus can lose a big share to income tax and National Insurance before it reaches your best employee. EMI share options can turn the same reward into a capital gain instead.
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