Being able to offer employee benefits is one way of making existing and potential employees feel valued. They can help build up a very attractive employment packages to help attract the best people for the job, or incentivise existing employees to commit more to the business. It shows how serious your business is about looking after its team.
Benefits can be any number of things, and in this section we cover some of the more common ones, as well as a handful of benefits you may not have even considered.
When providing employees of the business with additional perks on top of their wage or salary, you need to keep in mind that HMRC usually need to know about these perks.
You see, there is usually Income Tax and Employers National Insurance due on these additional items that would go unpaid if you didn’t inform HMRC about them.
For example, when someone is paid a salary then the mechanism for collecting Income Tax and National Insurance is processed when you run the payroll.
However, if you provide an employee with a car, say, then HMRC won’t know about this unless they are told. The way we report this is known as the P11d form.
The way it works is by reporting to HMRC what additional perks you provide your employees, and how much they are worth (the benefits… not the employees). Once HMRC are aware of this then they will reduce the employees Tax Code by that value so that the employee ends up paying Income Tax earlier than they otherwise would have.
The final catch up for HMRC is to charge the business the Employers National Insurance on the same value, so that once is all said and done, HMRC have the same amount of Income Tax from the employee and same amount of Employers National Insurance they would have had than if the employee was just paid a little more to cover the perk being provided.
By providing this, the business will need to report each year using a form called a P11d. This tells HMRC the total value of the benefits provided, and ultimately the amount of extra Employers National Insurance due to HMRC from the business. These are submitted between April and July each year with the Employer National Insurance being paid no later than July.
Further information can be found at gov.uk
Some types of benefits are: