Employment and remuneration – looking after your employees
Feed employees with free or subsidised food in a staff canteen. Where the food is available to all employees, or all who work at a particular site, there is no taxable benefit for employees when they receive free or subsidised food. A catering or restaurant business must designate an area exclusively for staff to use to eat their employer- provided meals. Provide all-electric company cars. For 2026/27, all-electric company cars can be provided to employees with a taxable benefit of just 4% of the list price of the vehicle. The employer can claim a 100% first year capital allowance deduction for the cost of new wholly electric cars. As an alternative to company car provision, all-electric cars work very well under a salary sacrifice arrangement if the employee is taxed at the higher or additional rates. The employee sacrifices a proportion of their gross pay in return for being provided with the car. Be warned that the taxable benefit for all-electric cars will increase to 9% by 2029/30. EXAMPLE On 6 April 2026, TW Ltd provided its director, Elaine, with a brand-new electric car which has a list price of £27,000. TW Ltd also pays for car insurance, servicing and any repairs. TW Ltd can claim a deduction of £27,000 plus the related running costs when calculating its trading profit. The taxable benefit for Elaine is £1,080 in 2026/27. If she is a higher rate taxpayer, the tax cost of using the car for the entire year will be just £432. Encourage clean commuting by providing electric charging points. Provide electric vehicle (EV) charging points at your business premises for your employees to use. There is no taxable benefit for the employees who use the electricity to power their cars and the business can claim a 100% deduction for the costs of installing EV charging points before April 2027. Assist employees with the extra costs of working at home. As an employer, if you require your employees to work from home, you can reimburse them free of tax and NIC for the extra costs of doing so. This could be because they live far away from your office, or because you do not have an office. The tax advantage is not available where an employee simply chooses where they work and employees cannot claim any tax relief for costs that the employer does not reimburse.
Help employees meet unexpected bills with small loans. You can provide an interest-free, or low interest loan, to your employees to help them pay any personal bills. The loan must be repayable, and it is advisable to have a formal loan agreement in place which sets out the repayment terms. As long as the total amount lent by the employer to the employee does not exceed £10,000 at any point in the tax year, there is no taxable benefit for the employee. Annual exemption of up to £500 where you fund medical treatment Provide your employees with an annual health check and eye test. The health check is free of tax. Medical treatment paid for by an employer is generally a taxable benefit. However, there is an annual exemption of up to £500 where you fund medical treatment that will assist an employee’s return to work from sickness or injury. The eye test is also tax-free if the employee needs to use a computer screen or similar display screen as part of their job. Any special corrective lenses required to use that equipment can likewise be provided tax-free. Supply your employees with one tax-free mobile phone each. An employer-provided mobile phone is tax free, as long as it is the employer rather than the employee who owns the phone and takes out the contract with the telecoms company. Encourage your employees to cycle to work on a subsidised bicycle. You can lend bicycles and associated safety equipment to employees to use to commute to work and for any other private journeys. The bicycle and safety equipment can be provided instead of a portion of pay under a salary sacrifice arrangement (similar to the tip for all-electric cars). The employee can be invited to buy the bicycle at a significant discount at the end of the loan period, and there is no limit on the value of the bicycle that can be provided. TIP Salary sacrifice arrangements are particularly attractive where employees are facing higher marginal tax rates as a result of frozen tax thresholds. Salary sacrifice works well where there is no taxable benefit for the employee (pension contributions and bicycles), or where the amount of taxable benefit is relatively low (all-electric cars).
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