REWARD
Perks of the job
An enduring part of payroll work around the globe is dealingwith benefits in kind (BIKs). In the first of an occasional series, TimKelsey FCIPPAIPA, global payroll consultant at Kelsey’s Payroll Services looks at howpayroll deals with this important topic in other countries, all over the world
H ow many of us realise that the work perks comes from the more formal English word ‘perquisites’? Because this is the description that will often be applied in other English- speaking countries, from India to Jamaica, when describing the provision of BIKs to employees. The provision of perks, whether they are taxable, and what value to use when assigning them to tax will be a major challenge for any payroller required to work on multiple jurisdictions. Let’s start by considering how different the UK’s approach is from the rest of the world. Firstly, the provision of benefits to employees is more likely to involve mandatory payrolling. Whilst some jurisdictions do follow the UK’s approach of merely relying on mandatory reporting (the approach taken in Hong Kong and Singapore, for example), it is far more likely that the employer will be required to process benefits for taxation via payroll at the time the benefit is provided. Secondly, the UK’s approach of not subjecting a benefit to employee social security contributions is, again, in the minority – most countries require the employee to pay a social security contribution on the value of any perks, and for this to be reflected in the earnings then used to calculate social security benefits. Lastly, the
position of requiring an employer to pay a completely different category of social security contribution through class 1A National Insurance (NI) is also unusual – the employer will usually pay the standard employer contribution on a benefit using the same rules and rates applied to cash payments. The pattern is for a meal voucher to be tax-free provided the employee makes
shillings being worth only fifteen pence. But it certainly would be missed in other countries. The pattern is for a voucher to be tax-free provided the employee makes a minimum contribution towards it. The table below summarises some of the meal voucher schemes available around the world. Each of these schemes requires information on the vouchers provided to be recorded on payroll, and for any employee contribution to be deducted from pay. And, of course, if the maximum tax-free amounts are exceeded, any balance will need to be payrolled and subject to full deduction. The provision of a company car is also one of those perennial benefits that employees value around the globe. As tax policies are used with the aim of having positive impacts on the environment, the methods of valorisation often use a similar approach to the UK by looking at CO2 emissions. Other countries will look at a percentage of list price – the Republic of Ireland used a standard percentage of 30% of original market value to set the annual taxable income represented by the provision of a car. This percentage is reduced should the user achieve high business miles. But the benefit is valued on the basis that the provision of fuel is automatically provided by the employer,
a minimum contribution towards it
How different benefits are treated
One of the most comprehensive benefits provided by employers the world over is the provision of meal vouchers. And, of course, the UK used to agree with this approach with the award of a three- shilling tax-free voucher per day. When this concession was finally abolished in 2013, it wasn’t missed – what with three
Country
Employer (ER) contribution
Employee (EE) contribution
Belgium
€6.91 per working day
€1.09 per working day
France
50–60% of the cost capped to €5.55 per working day
Up to €5.55 per working day
Germany
€3.10 per working day
€3.47 per working day
India
Indian Rupees (INR) 50 per meal provided
None required
| Professional in Payroll, Pensions and Reward | December 2021 – January 2022 | Issue 76 24
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