Tax Effective Incentives

The employment market is tough, here are some tax effective incentives you could use to help attract/retain staff...

Living accommodation - If living accommodation is necessary for the proper performance of the employees duties then the accommodation can be provided tax free, with one of these exemptions being for agricultural workers who live on farms or agricultural estates.

Mobile phones - An employee can be provided with one mobile phone tax free as long as the contract is between the employer and the supplier.

'Cycle to Work' scheme - If the employer operates the scheme then the lending or hiring of bike to employees does not count as a benefit as long as they are available to all employees and mainly used for getting to work.

Mileage - May not be too relevant as a lot of workers may just work on the farm or use farm vehicles when going out and about, although if a farm worker uses their own vehicle to go to the auction for example then they could be paid 45p/25p per mile tax free by the employer.

Protective clothing - Protective clothing that is required to be worn as a matter of physical necessity can be provided to employees tax free because of the nature of the job for items such as overalls, protective gloves and boots.

Long service awards - You don’t have to report or pay on a non-cash award to an employee if all of the following apply:

• they’ve worked for you for at least 20 years

• the award is worth less than £50 per year of service

• you haven’t given them a long-service award in the last 10 years

For example, you can give a non-cash award with a value of up to £1,000 for 20 years’ service.

Meals - You don’t have to report anything to HM Revenue and Customs (HMRC) or pay tax and National Insurance if you offer all your employees:

• free or subsidised meals of a reasonable value at a workplace canteen

• vouchers that cover the cost of buying these meals

Medical or dental - The following are tax free if paid on behalf of employees:

• periodic medical checks or health screening (1 per year)

• Eye test (1 per year) – but only if required by H&S legislation for employees who use a computer monitor or other screen

• Glasses /contact lenses – same as above if monitor or screen used

• Up to £500 of costs are tax free for medical treatment to help an employee return to work – usually if deemed unfit to work for at least 28 days

Social functions / parties - To be tax free, the party or similar social function must be:

• open to all your employees

• annual, such as a Christmas party or summer barbecue

• cost £150 or less per person

If multiple events, as long as the combined cost of the events is no more than £150 per head, they’re still exempt.

Sporting / recreational facilities - Tax free if they:

• are available for use by all of your employees

• aren’t available to the general public

• are used mainly by employees, former employees or members of employees’ families and households (employees of any companies you’ve grouped together with to provide the facilities also count)

• are somewhere that isn’t a private home, holiday or other overnight accommodation (including any associated sporting facilities)

• don’t involve the use of a mechanically propelled vehicle (including road vehicles, boats and aircraft)

Professional fees - If an employee pays subscriptions and the employer reimburses the employee, or if the employer pays the subscriptions directly then these can be paid tax free as long as the professional body is on List 3 of approved bodies (list here).

Training - Exempt where the employer provides work related training.

Trivial benefits - You don’t have to pay tax on a benefit for your employee if all of the following apply:

• it cost you £50 or less to provide

• it isn’t cash or a cash voucher

• it isn’t a reward for their work or performance

• it isn’t in the terms of their contract