Business Tax Tip 10 – Are you rewarding your staff tax efficiently…for you and them?


Are you certain that you make the most of tax-free benefits in kind for your staff?

Some of the possibilities include:

  • Providing mobile phones (no more than one per employee)
  • Subsidising certain forms of transport to and from work – including bus fares
  • Providing workplace nurseries and crèches
  • Sporting and recreational facilities
  • Health checks
  • Car parking
  • Paying relocation expenses
  • Up to £150 per person per year for staff parties
  • Making cash awards for contributions to a staff suggestion scheme
  • Allowing staff to use pool cars for business purposes
  • Paying staff up to an extra 5p a mile if they use their own car to take fellow employees on the same business trip
  • Providing company bicycles
  • And even… paying employees up to 20p a mile when they use their personal bicycles on business journeys! (or up to 24p a mile for a motorbike)

Have you considered using childcare vouchers to save Tax and National Insurance for both employees with young children and the business?

Tip: Employers can pay child care vouchers to employees of up to £55 per week where the individuals joined the employer’s scheme before 6th April 2011, without the employee suffering Tax or National Insurance.

Where individuals joined the scheme on or after 6th April 2011 then higher rate taxpayers can get up to £28 per week, and £25 per week in 2013-14 (£22 in 2012-13) for additional rate taxpayers without the employee suffering Tax or National Insurance. On top of this the employer can save 13.8% National Insurance on the payments.

Have you looked at the possibility of motivating and rewarding your staff by giving them share options?

Tip: Some commentators regard the government’s Enterprise Management Initiative scheme as a “must” for small businesses who want to motivate and reward their team. Not only is the scheme very flexible, but the tax and National Insurance savings are very attractive, despite the changes to capital gains tax.

If any of your employees have been with you for more than 20 years, do you know how to reward them with a really special long-service present that is completely tax free for both you and them?

Tip: Tax-free gifts can now be worth up to £50 for each year of service (up to a maximum of 20 years).

If your employees work from home, are you using the rules so that you can reimburse them tax free?

Tip: It is possible for you to pay £4pw tax-free without the employee providing any evidence that they have spent money, and larger amounts if they provide evidence of spending

Any questions?

If you would like to arrange a free meeting with a Liverpool accountant to discuss business tax, either at our office or at your premises, please contact us on 0151 724 3960 or by email at [email protected].

Alternatively, you can use our website contact form.

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Added by Jon Davies

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