Attracting and keeping good employees isn’t always about paying higher salaries. A well-chosen benefits package can make your business a more attractive place to work while offering valuable tax advantages.
Many employee benefits allow your business to claim tax relief, and some can be provided without creating an additional tax bill for your employees when the rules are followed.
Choose benefits your employees will value
Before introducing new perks, find out what your team actually wants.
Some employees may value extra training, while others appreciate flexible working, wellbeing support or help with commuting. A simple staff survey can help you invest in benefits that make the biggest difference.
Tax-efficient benefits to consider
Some common options include:
- Mobile phones – One company mobile phone per employee is generally taxfree where the employer holds the contract.
- Employer pension contributions – Usually tax deductible for the business and not taxable for employees.
- Work-related training – Training that helps employees carry out their current role is normally tax efficient.
- Annual staff events – Events such as Christmas parties can qualify for tax exemptions if HMRC’s conditions are met.
- Trivial benefits – Small gifts costing up to £50 may be exempt from tax if they meet the qualifying rules.
- Cycle to Work schemes – Approved schemes continue to offer tax advantages while promoting healthier commuting.
Some benefits still create a tax charge
Not every employee benefit is tax-free.
Private medical insurance, company cars, gym memberships and some accommodation arrangements can create taxable benefits that need to be reported correctly. They may still be worthwhile, but it’s important to understand the tax position first.
Get the details right
When introducing employee benefits, you’ll also need to consider:
- Payroll and National Insurance.
- Benefit reporting requirements.
- Employment contracts.
- Accurate record keeping.
Getting these right helps avoid unexpected tax bills and keeps your business compliant.
We’re here to help
Employee benefits can improve staff retention, boost morale and support recruitment when they’re planned properly.
At North Devon Accounts, we can help you choose tax-efficient benefits and make sure they’re handled correctly from both a payroll and tax perspective.
Thinking about reviewing your employee benefits? Contact North Devon Accounts today for clear, practical advice tailored to your business. Simply click the button below.
