Outside of the ‘tax free’ benefits posted previously, other benefits that can be provided by a company to you and your employees in a tax efficient way are detailed in the following blog posts.

Lunches & snacks

Provided all staff are offered the option, providing lunches to staff at the business premises is tax free for the employees, and the business can claim Corporation Tax relief and recover VAT (where relevant) on the costs.

The conditions to qualify are that the lunches must be available to all employees, be ‘reasonable’, and provided at the business premises (e.g. canteen or kitchen area).

Childcare support

There are three potential ways to help fund childcare in a tax efficient way:

Tax free childcare is a scheme that allows you to save up to 20% on childcare costs. The government will contribute up to £2,000 per year for each child in childcare. So in effect this gives a 20% discount on childcare costs up to £2,000 per child per year.

Childcare vouchers – these are now only available if you signed up to a scheme (which is still operated by the company) before 4 October 2018.

The scheme was more tax efficient than the new tax free childcare, so if you are eligible this should be considered too. This scheme is operated via ‘salary sacrifice’ and so provides an equivalent benefit to the ‘tax free’ benefits listed above.

Workplace creches, whilst not practical for most businesses, a workplace creche can be provided to you and your employees with no tax or National Insurance liability. So, if applicable, it is worth considering further.

Bicycles & equipment cycle to work

Bicycles and equipment can be purchased under a ‘salary sacrifice’ scheme so that the cost of the bike and equipment comes out of pay before being taxed i.e. it offers equivalent savings to the ‘tax free’ benefits listed above. This has a tax and National Insurance saving for the individual (up to 47% for the highest rate taxpayers) and also gives a National Insurance saving to the company. This saving can also be passed on to you to make it even cheaper to get the bike (and equipment).

The amount that can be spent is now uncapped (compared to the previous £1,000 which applied to most businesses). So a top quality bike and equipment (helmet, gear, lights, etc.) can be bought with significant savings available.

The way the schemes work in practice is that there is an initial rental period (usually 12 – 24 months) after which you can hand the bike back, buy it at its current value, or continue to rent it from the cycle scheme provider at low cost. Choosing the last option is usually the most cost effective, meaning you can own the bike outright after 4 or so years.

An example of a cycle scheme provider and videos on how it works can be found here: www.cyclescheme.co.uk

Onsite gyms & sporting facilities

As a way to promote the health and wellbeing of you and your staff, you can offer access to sports or recreational facilities, or non-cash vouchers which can only be used to access those facilities as a benefit.

There is an exemption from tax if:

• the facilities are available to all employees
  
  
• it is not open to members of the general public
  
  
• the facilities are used wholly or mainly by employees, former employees or family members of those groups
  
  

If multiple businesses use one set of facilities, this does not trigger a benefit. This would apply to office gyms, shared gyms in communal office space and recreational facilities.

Taxable benefits still worth considering

It is also worth considering other benefits that can be offered to you and your employees. Whilst not ‘tax free’ or available as a ‘salary sacrifice’ scheme, they can have other benefits, such as:

1. You may get better rates or premiums for bulk buying for a number of individuals.

Specific examples of the types of products worth considering are:

• Medical cover. This definitely meets all the benefits listed above.
  
  
• Many policies have discounted gym memberships, offers and promotions for mental and physical wellbeing.
  
  
• Some policies allow members to reclaim dentistry and optician costs. This can be hugely beneficial for you and your employees and in some cases may outweigh the tax cost of having the benefit.
  
  
• It is worth noting that medical insurance policies which cover only injuries or diseases that result from your work are tax free.

• If your medical insurance doesn’t cover this, your business can pay for your medical treatment when you are working overseas.
  

2. Increased wellbeing and productivity of staff.

3. Better quality products and rewards that employees would otherwise get if they had their own policy or didn’t have a policy at all.

4. It’s just a good employee perk!

• Policies can give quicker and no cost access to care in the event of illness or injury. Again this can be very valuable in giving you and your employees top quality support in times of need.
  
  
• Shareholder protection insurance. This type of policy will allow things like remaining shareholders to buy out the family of a deceased shareholder
  
  
• Critical illness cover or income protection insurance.
  
  

Company cars

In recent years, the tax on company cars has increased to the level where it is now not usually financially viable for the company or the user of the car. However, there is one main exception – electric cars.

Where company cars are provided for specific individuals, a taxable benefit will arise on you or your employees. This is based on a percentage of the list price of the vehicle, determined by its carbon dioxide emissions. The use of lower emissions vehicles can generate significant tax savings.

Since 6th April 2020, the benefit in kind (“BIK”) has been based on new higher C02 figures determined under the Worldwide Harmonised Light Vehicle Test Procedure (“WLTP”).

Care must be taken when calculating the BIK for the current tax year as cars which used to be under one band may have changed due to the WLTP, this can result in a higher cost to the employee and employer.

Fuel costs provided by the company will be subject to an additional benefit in kind charge unless the cost of fuel is in relation to journeys that are part of the employee’s business duties, e.g. a service engineer travelling to an appointment.

Electric cars

An electric car can mean a “pure-electric” car or a hybrid (part petrol/diesel and part electric). There are two key tax advantages available if the car meets the relevant conditions:

1. Low tax on the individual user.
   
   
2. If the business buys the car, 100% Corporation Tax relief is available in the year of purchase. To avoid a clawback of the Corporation Tax relief you have to keep it for a minimum of 4 years.
   
   

Charging electric vehicles

The cost of charging electric vehicles at the place of employment is exempt from tax and NICs. It makes no difference who owns the car.

It is also possible for you to receive a tax-free benefit if a charging point is installed at your home provided you have a company car. It would be taxable if you had a charging point installed at home to charge your personal car which you used for business purposes.

Running costs for company owned car

With the exception of fuel (which will result in an additional benefit in kind charge for non-business use), the benefit in kind charge covers all motor running costs, including costs such as servicing and insurance.

Where a vehicle is currently provided, but insurance is not, the company should consider providing insurance too – the increased cost will be deductible for Corporation Tax purposes, but no additional tax charge will arise on you.

Additional items for company owned cars

Ordinarily, car accessories are included in the value of the vehicle when calculating the company car tax charge.

However, there are two company car accessories you could purchase via your business which are completely tax free.

1. Personalised number plates.
   
   
2. Hand free kits and equipment – if you need a cradle for your mobile phone or a cable to charge your phone, it is possible to purchase them via your business.

32 Ways To Save Tax and Extract Maximum Value From Your Business

These tips are from our eBook, 32 Ways To Save Tax and Extract Maximum Value From Your Business. This guide explores 32 ways to ensure you’re maximising every opportunity you could be, to improve your life, your families and your employees.

Download 32 Ways To Save Tax and Extract Maximum Value From Your Business eBook.