Company Car and Other Non-Cash Benefits
If an employer gives their employees non-cash benefits, the benefits can be treated as additional income and employees might have to pay tax on the benefits. This is known as a taxable benefit in kind.
Such benefits may include cars, private health care, holidays, loans, accommodation, relocation allowances and any other entitlements beyond the legal minimum.
Cars
Increasing tax and NIC on company cars has led to many employers and employees shifting to other methods of providing such benefits, including cash payments. Insurance is an additional consideration.
Care will also need to be taken with reimbursement of business and private mileage, as mileage payments for use of the employee's own car are subject to Inland Revenue limits and the employee will pay tax on any excess. No tax is payable by employees using pool cars.
Private Healthcare
Private healthcare is a taxable benefit, chargeable on the cost to the employer.
Loans
Interest free loans or low interest loans to employees are taxable benefits if the loan exceeds £10,000.
Relocation Expenses
The maximum amount payable for relocation expenses, without attracting tax liability, is £8,000.
Mobile Phones
If an employer provides employees with a mobile phone and pays all the bills including line rental and private calls, this is exempt from both tax and NIC.
If an employee has their own mobile phone contract but their employer agrees to pay the bills, or if the costs are reimbursed by their employer, the employee is liable to both tax and NIC.