Accommodation exempt from benefit in kind
Accommodation for clergymen and ministers
Accommodation provided for clergymen and ministers mainly or substantially for the purposes of their duties is exempt from benefit in kind.
Accommodation on business premises where it is essential for duties
To claim this exemption, the accommodation must form part of the employer's business premises and one of the following apply:
- the occupation of those premises is essential to the performance of the employee's duties as a person responsible for the care and security of those premises
- the occupation of those premises is essential to the performance of the employee's duties as a person responsible for the care of persons occupying those premises
- the occupation of those premises is essential to the performance of the employee's duties as a person responsible for the care of animals kept on those premises
Approved pension schemes
Contributions made by an employer to an employee's approved pension scheme(s) are exempt.
This is restricted by 25% of the pension holder's relevant earnings if they own the company or they are connected to the person who owns the company. Any excess is taxed on the individual as a benefit in kind. This excess can not be claimed as tax deduction.
Catering, crèches and entertaining
Business-related entertaining and entertaining the employer provides to staff generally.
Catering facilities such as tea / coffee or the use of a staff canteen if made available to all staff. Beverages provided by vending machine are also included.
Crèche facilities where the facilities are available to staff generally. This does not cover circumstances where employers meet all or part of the costs incurred by staff in using external facilities for child care.
The provision of the first £5 per working day of non-transferable meal vouchers where the employer provides no staff canteen and these are made available to staff generally.
Equipment and clothing
Provision for use of a telephone. This covers both mobiles and landlines.
Provision for use of a computer.
Provision of newspapers.
Provision of periodicals and journals for use in the performance of the duties of the employment.
Equipment used for duties
The provision for use of equipment provided for use in the performance of the duties of the employment.
The provision for use of specialised or protective clothing supplied by the employer for use at work. Wearing the clothing to or from work does not affect the exemption. Also included is the cost met by the employer to maintain the clothing eg dry cleaning of uniforms.
If an employer reimburses the genuine business expense of an employee's travel expenditure on a business trip, such sums will not be treated as salary in the hands of the employee.
If an employee takes a business trip but chooses to extend it for private purposes, then a benefit would arise on the additional cost to the employer of the private element.
If an employee receives air miles or other similar incentive schemes as a result of business travel, no benefit in kind will be charged (by concession).
Payment of professional subscriptions
Effective from 1 January 2016, if the employer pays the professional subscriptions for an employee either directly or the employee pays the subscription and the employer reimburses them and:
- the professional body is on list 3 (HMRC's list of approved professional bodies)
- the expense is incurred in the performance of the employee's duties
then the employer doesn't have to report this to the taxes office.
In these circumstances, the individual employee can't claim an expense against their personal tax assessment.
List of approved professional bodies (gov.uk website)
Other business expenses
Any other benefits which are insignificant and arise purely incidentally from bona fide business expenditure paid by the employer are also exempt.
Group life assurance
Group life assurance premiums (other than term assurance) in respect of the employee and / or family. This does not cover meeting an employee’s personal costs.
Group medical insurance
Group insurance cover (eg BUPA) for medical costs of the employee and / or family. This also includes group cover for dental insurance, critical illness, long term disability etc. Guidance on specific schemes should be sought from us if there is any doubt. This exemption does not cover payments made by employers into employees individual arrangements.
The employer provides insurance covering liability in respect of alleged negligence by the employee in the course of his duties.
Medical screening facilities where they are made available generally to those staff for whom it is appropriate on grounds of age / gender or other medical risk factors.
We will accept for exemption cases where screening is restricted on reasonable grounds. If it is available only to one employee or a select group as a perk it will not be exempted.
The provision of annual ‘flu jabs’ is exempt when provided to staff generally.
Permanent health insurance
Insurance provided by the employer for the employees against the loss of all or part of the employee’s emolument or employment by reason of the employee being unable, through ill-health, to discharge the duties of the employment. This is commonly known as Permanent Health Insurance (PHI).
Social security contributions
Any contributions the employer is required to make to the social security scheme in respect of employees.
Staff discounts, loans and expenses
Staff discounts on any goods or services ordinarily supplied by the employer in the course of the employer’s business.
Preferential rate or interest free loans
Preferential ('cheap') rate loans or interest free loans. This exemption does not cover sums paid to employees to subsidise the interest paid on their loans.
Free or subsidised car parking
The provision of a car parking space by the employer to the employee.
The following are not covered by the exemption:
- parking season tickets
- parking pay cards
- payment for a private parking space rented by the employee
- payment of a parking allowance
Relocation expenses incurred by an employee newly recruited or transferred to the Island. This covers reasonable and actual expenditure on removal of household effects, including a motor vehicle, storage of effects for up to 12 months and travel costs.
By concession, relocation expenses from the Island will be similarly exempt.
A disturbance allowance may be paid instead of the employer covering relocation expenses. The first £7,500 of any disturbance allowance paid to cover the cost of removal of household effects, storage of effects up to 12 months and travel costs is exempt.
The amount paid should not exceed the actual costs incurred. Any amount paid over the actual costs will be treated as part of the employee's salary.
Training and awards
Training costs where the subject matter is related to the duties, or anticipated, future duties of the employee. This covers study materials, travel and accommodation as well as third party trainers.
Long service awards
Long service awards (other than cash) provided the employee has worked for the employer for at least 10 years and the value does not exceed £50 for each year of service.
Vehicles and transport exempt from benefit in kind
Vehicles designed for carrying goods
The provision of vans, lorries, tractors or other motorised vehicles designed mainly for the carrying of goods or burden of a business nature or tools of a trade.
The provision of pool cars
To be exempted, the car:
- must be a vehicle that is used by more than one employee (disregarding any office holder or employee who is a member of the family or household of the office holder or employee seeking the exemption) on a frequent basis and it is not used by an employee to the exclusion of others for any period of time whatsoever
- cannot be taken home overnight by any employee other than one whose duties included being on 24 hour call
- keys must be kept centrally at the workplace and not kept by any particular employee
A booking system should also be in place for the use of the car.
Cars used solely for an employee's duties
The provision of a car used solely in the performance of the employee’s duties in an employment which requires the essential business use of a car.
In practice minor incidental use such as travel to and from home to the place of work will not destroy this exemption. Where there is substantial business use (75% or more) but the above criteria are not met, the benefit will be charged but at a lower rate to normal.
Calculating benefits in kind
Provision of transport
Transport provided within the Island between place of work and home where the employee is working unsocial hours. These hours are defined as between 10pm and 6am.
Transport provided in the Island between place of work and home for severely disabled employees.