Employment Tax

Non-taxable benefits

Produced by Tolley
  • 19 Oct 2021 23:22

The following Employment Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Non-taxable benefits
  • Exemptions
  • Benefits covered by deductions
  • Optional remuneration arrangements

Non-taxable benefits

The basic rule is that all benefits provided to an employee by reason of their employment are taxable unless there is a specific exemption or other rule that means they are not chargeable to tax.

Exemptions

The main exemptions for employee benefits are in ITEPA 2003, ss 227–326B (Pt 4).

Below is an alphabetical list of the main exempt benefits, a brief description of each and a link to the relevant guidance note on the subject. This guidance note does not include business expenses, it covers only benefits provided for the employee for their own use or enjoyment.

If a benefit qualifies for an exemption, there is no need to record it on form P11D.

BenefitBrief detailsRelevant guidance note
Annual parties and similar annual social eventsThe total cost per head of all such functions in the tax year is less than £150Annual parties
Armed forces’ travel to take leaveCovers any form of travel provided to enable members of the armed forces to go on or return from leaveArmed forces
Bicycles (provision of bicycles with no transfer of the asset to the employee)Bicycles have to be made available to all employees (not all have to take up offer) and bicycles have to be mainly used for travel to / from work. Exemption extends to cycle safety equipmentBicycles
Board and lodging for home care workersThis covers reasonable scale of board and lodging provided for carers in the home of the person they are caring for. The care provided must be needed by reason of old age, mental or physical disability, or a past or present dependence on drugs / alcohol or other illness or mental disorderLodging
Canteen and workplace mealsFree / subsidised meals must be made available to all employees at the same location (not all have to take up offer). Meals must be on a reasonable scale. Meals must not be part of a salary sacrifice arrangementCanteens and workplace meals
ChildcareMust be provided for a child

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