Non-taxable benefits in kind for directors and employees
Many directors and employees receive perks with their employment. Many of these benefits are taxable. However, there are some non-taxable benefits in kind for directors and employees available. Understanding these will help you maximise profit extraction from your company whilst also staying compliant with HMRC rules.
Overview
Non-taxable benefits in kind are perks from your company that don’t attract income tax or National Insurance Contributions (NICs). Additionally, these are either legally exempt or considered minor, requiring no HMRC reporting.
Common Non-Taxable Benefits in Kind
We've set out below some of the more popular non-taxable benefits in kind for directors and employees. Equally importantly, these are most relevant where you are a director and shareholder of your own company.
Additional Non-Taxable Benefits in Kind
Furthermore the following non-taxable benefits in kind can be made available to directors and employees. Although these are more relevant to larger businesses.
Summary
When used effectively, non-taxable benefits in kind can enhance your own and your employees pay package without incurring additional NI and tax liabilities. Furthermore, they can help motivate and retain your key employees and attract new talent.
Whilst generally tax-free, your company must follow HMRC rules and keep accurate records. However, some benefits require fulfilling specific conditions to qualify. As a result, you should regularly review your benefits packages to ensure you are compliant, whilst maintaining tax efficient profit extraction from your company.
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