The UK Rules
Employee Benefit Expenses

Employees Benefit Expenses UK

Fringe benefits or 'perks' are indirect means of compensating workers above and beyond their normal wage. As an employer, you should understand how expenses and employee benefits work.

Several factors determine what benefits in kind (BIK) employees (and some company directors) receive through employment. But, as a general rule, the size of the organisation would be a major factor.

What are Taxable Benefits in Kind HMRC?

There are different kinds of employee benefits, but perquisites are usually:

In fact, the government sanctions some employee benefits - which means they are mandatory. Whereas, certain other benefits from employment are either supplementary or optional. They would not be part of, or included in, your salary cheque or wages.

As a rule, it is the discretion of your employer that determines what supplementary benefits you may get. Among the most common are health insurance and pension coverage.

Tax Free Benefits in Kind UK

United Kingdom taxation does not apply to all benefits in kind. People earning less than their standard personal allowance would not get taxed on BIK. But, tax does apply to some 'non-cash' benefits of monetary value - no matter what your income is!

As the recipient of tax-free benefits in kind, there would be no need to enter it on a tax return. Typical examples of tax free employee benefits include:

Trivial Benefits in Kind

HM Revenue and Customs (HMRC) consider some benefits in kind as 'trivial' - meaning they are not taxed. But, to qualify as a trivial benefit in kind, all these must apply to the perk or fringe benefit:


Tax on Employee Company Cars

Charging an Employee's Electric Car

You might need to pay tax for charging an electric car used by an employee. You can check if you need to pay tax on employee's electric car and find out if they can get tax relief.

Check or Update Company Car Tax

Anyone who pays tax on a company car can check or update company car tax and then tell HMRC about the changes. Use 'Gwirio neu ddiweddaru'ch treth car cwmni' for the Welsh version.

Working Out Taxable Value

Use HMRC company car fuel benefit tool to calculate tax on employees' company cars. It uses list price and carbon dioxide emissions to work out benefit in kind tax on company cars.

PAYE Expenses and Benefits

Providing Benefits to Employees

There are various kinds of expenses and benefits for employers to report to HMRC and pay. Check how employment related expenses and benefits work for tax and national Insurance.

PAYE Settlement Agreements

Having a PAYE Settlement Agreement (PSA) in place simplifies the reporting process for employers. Find out how PSAs allow annual payments to HMRC on some types of employee expenses and benefits.

Tax on Trivial Benefits (BIK)

The treatment of tax on trivial benefits in kind varies. Check which conditions need reporting to HMRC and whether employers need to pay tax and National Insurance on them.

Providing Loans to Employees

Company and employer loans provided to employees will be subject to tax and reporting rules. Check what is exempt, what to report and pay, and how to work out the values.

Employees Benefit Expenses Explained for United Kingdom