Exemptions from benefits in kind

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

Business-related entertaining and entertaining the employer provides to staff generally.

Catering facilities

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

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.

Meal vouchers

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

Telephones

Provision for use of a telephone. This covers both mobiles and landlines.

Computers

Provision for use of a computer.

Printed materials

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.

Clothing

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.

Expenses

Travel expenses

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.

Liability insurance

The employer provides insurance covering liability in respect of alleged negligence by the employee in the course of his duties.

Medical screening

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

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

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.

Disturbance allowance

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

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

Bus passes

The provision of a prepaid bus pass or card for use to travel from home to work or in fulfilment of the employee's duties.

This is available from year of assessment 2023.

Bicycles

The provision of a bicycle, including an electric bicycle, for use to travel from home to work or in fulfilment of the employee's duties.