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If your employer provides you with non-cash benefits - such as a company car or medical insurance - you may have to pay tax on them.
If you're a company director, or you earn at a rate of £8,500 or more in a year - including the value of your benefits - then you'll always have to pay tax on any benefits you get.
You may have to pay tax on some benefits - such as living accommodation that's provided by your employer - no matter how much you're paid and whether or not you're a company director.
Normally, if your employer provides you with a car, you'll have to pay tax on the value of the benefit. The value depends on several things, such as:
The value of the benefit may be less if the car is unavailable for part of the year or if you pay something towards its cost - ‘capital contributions’ - or if you make payments to your employer for your private use of the vehicle.
If your employer provides you with fuel to use for your private motoring, you'll have to pay tax on this as a separate benefit.
You may have to pay tax on this benefit if your employer lends you more than £5,000 interest free, or charges you less than the official rate of interest on a loan. The value of the benefit you'll have to pay tax on is usually the difference between:
You may also have to pay tax on the benefit if your employer lends money to one of your relatives.
You won't have to pay tax on the benefit of an interest free or low interest loan from your employer if the total of all loans provided in a year is less than £5,000 or less.
If your employer provides you - or one of your relatives - with living accommodation you may have to pay tax on the benefit. There are different ways of working out the value of the benefit you'll have to pay tax on, depending on whether or not the accommodation cost more than £75,000.
You may not have to pay tax on the benefit if you're provided with the accommodation so you can do your job - or because it helps you do your job better.
If your employer pays for your medical insurance, you'll usually have to pay tax on the value of the benefit. This is normally the cost of the insurance premiums.
Your employer can give you some benefits that you won't have to pay tax on, such as:
The benefits listed above are just a few of the most common ones. Your employer will give you details of the benefits they've told the Tax Office about on form P11D Expenses payments and benefits - see the section ‘How the tax is paid’ below.
If you need any more information about what counts as a benefit and how it is taxed contact your Tax Office.
In certain circumstances you can get some benefits without paying tax on them. Tax-free benefits can include:
You and your employer both have to tell your Tax Office about any benefits you get. You'll have to show the benefits on your Self Assessment tax return (if you complete one) and your employer will have to fill in form P11D Expenses payments and benefits or form P9D Expenses payments and income from which tax cannot be deducted.
Your Tax Office may send you a tax code to collect the tax you owe through PAYE (Pay As You Earn).
Your employer will give you details of the benefits they've told HM Revenue & Customs (HMRC) about on the P11D or P9D. You'll need to keep these details for two years after the tax year they relate to. You'll need this information to fill in your tax return.
Bear in mind that you must tell your Tax Office about any benefits you or your family get from your employer even if you've already paid tax on them through PAYE.
Your employer will be able to help if you've got any questions about the benefits you get with your job. If you need help with filling in your tax return you can contact your Tax Office or phone the HMRC Self Assessment helpline on 0845 900 0444. The helpline is open from 8.00 am to 8.00 pm, seven days a week including bank holidays.
