You might get many benefits and pay expenses from your employer, but do you know that these pay expenses are Non taxable Income? There could be several reasons for tax-free benefits and expenses.
There can be a number of reasons for Non taxable Income and benefits from your employer. Some of them are listed here for you.
- Because of some exemptions or concessions, the benefits are provided to you.
- Under PAYE Settlement Agreement (PSA), your employer has settled payments on your behalf.
- Statutory consumptions and concessions.
When you do not tax on benefits or exemptions, then you do not add them while you claim for tax returns.
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Previously it used to be a frequent practice where the employees were offered to sacrifice a portion of their pay which is taxable. To get non-taxable benefits. However, the law doesn’t allow it now and it can be done under certain conditions. This includes pension contributions and childcare vouchers.
Most Common Exemptions And Concessions:
Certain categories of work processing provide under non-taxable Income on employees, the most common categories are discussed below for you. Let’s delve deep to know.
- Supplies And Services
- Subsidized Meals
- Trivial Benefits
- Employer Contribution to Pension
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Supplies And Services:
When you join a company as an employee, there are certain obligations to offer your services. What you agree to on the day of the job agreement, is often written in your job description as well.
While you are performing your duties, the employer is also providing you with certain supplies and services that come under non-taxable income and it includes phone, accommodation, stationery, messenger, and other facilities in the business premises. The private use of such facilities is not allowed. Also, you can not take any of the provided equipment out of the work premises.
Moreover, in cases like COVID – 19, HMRC provides basic requirements to ensure smooth work processing at home.
There are some conditions that are asked to meet if you are getting free meals. Some of them include the following.
- Such meal offers are available within the work premises like in canteen or cafeteria for the staff.
- A reasonable scale is demanded meals.
- All the staff members can avail this opportunity of free or subsidized meals.
- In case, any staff member could not get the meal, he is provided with a free meal voucher.
This offer is not for the business that is associated with hotels, cafes, or any other similar business. Some of the restaurants do give this offer and they have separate designed rooms for only staff members to meet the need of Non-taxable Income.
It was decided in April 2016 that any kind of cost that does not cross the limit of 50 pounds will not be entertained. As it is not considered as work done by you and no benefit will be given in cash form.
No limit is considered as to what extent of trivial benefits of Non-taxable Income, an employee can avail of within a year unless that employee is the director of the company. In the case of the director, one can not get the benefits over the limit of 300 pounds.
Employer Contribution to Pension:
The contributions that are made by the employer for the employees’ pension scheme are also included in Non-taxable Income. But there are certain limits to that as well. Either the case is where the employer makes a contribution to a personal pension scheme or occupational pension scheme, this all will go as non-taxable benefits.
To sum up the discussion we can say that there are several types of payments and benefits to entertain as Non-taxable Income. The employees must be aware of such benefits to avoid ugly experiences at work. We hope this blog helped to bring the most common benefits to your knowledge.
To know more about benefits and payments, talk to our expert advisory and entertain yourself with the best.