Working - with benefits

It's that time again - when your company has to prepare the P11D returns for employee benefits.

Each year you are required to pay 13.8% National Insurance premiums for all employee benefits that are provided as part of specific employee packages. This will include:

  • A company car
  • Medical insurance
  • Gym membership
  • A living or rent allowance

This is far from an exhaustive list; anything that is provided to an employee as an individual, in addition to their pay, that is not an essential part of their role or can be for personal use as well as business use must go on the list.

As an employer you have a duty of care for your staff, as a legal requirement, but there are additional benefits that show your organisation to be an employer that goes beyond the bare necessities.

For instance, providing tea and coffee is considered a necessity (and not taxable) - but if you want to go beyond a jar of instant and an industrial size pack of teabags, you could provide a smart coffee machine that makes a decent cup and a range of different teas, from herbal and green tea, to good old English breakfast tea.

In the current situation, where staff are operating in your workplace, it's your responsibility to provide PPE to protect them, that's a necessity - and isn't taxable. If your staff can work from home, how much have you done to help them with equipment, a proper chair to protect them from back pain, setting up a work area, etc.? That's taking it a step further.

What has this got to do with P11D? It's all to do with the level of care that you provide to your employees. Long-term it also contributes to your reputation as a good employer - and can affect the quality of candidates you have to choose from in the future. It all comes back to the bottom line - better employees produce better results.

Tax free tips

Did you know that, as limited company, you can pay one mobile bill per employee as a tax free benefit? While it means that the mobile phone has to be in the company's name, it's a great benefit to offer. It's low cost for the company and high value to the employee.

Have you heard of 'trivial benefits'? This applies to anything bought directly by company that is for an employee and costs less than £50. These small items are not taxable and can cover anything, including tickets for events, flowers, gifts, etc. Each employee can have an unlimited number of these throughout the year, but for directors the amount is capped at £300 per annum.

Staff working from home can claim a weekly amount of £6 to cover energy costs and any other domestic bills that are impacted.

You can spend a total of up to £150 per employee for annual events open to all employees, such as the Christmas Party or a summer barbeque.

So there's more to your P11D than you might think! Don't forget it must be submitted by 6 July coving the year to 5 April 2020.