The cost of living crisis is hitting everyone, including small businesses. You are required to raise the wage rates of employees on the National Minimum Wage by 6.6% for pay periods starting from 1 April 2022, but some employees may still be struggling to make ends meet.
Here are a few things your business could do to help those employees; these ideas are all tax-free for the individual, except for the small benefit charge on electric cars.
Eat for free
You can provide free or subsidised meals to your employees at your premises. As long as the food is provided equally to all your employees, or all those working at a particular site, there is no taxable benefit for the workers.
Bus to work
Providing free or subsidised transport for employees to get to work can help those who struggle to pay for fuel for their cars. A works bus that transports your employees (and their children if required) to and from work can be used for the full journey, or part of it when employees are collected from a pick-up point. The vehicle must be designed to carry at least nine passengers, and the service must be available generally to any of your employees.
Alternatively, your business could work with the local authority to subsidise a key bus route for your workers to get to and from work.
An employee can use a company electric van for any private or business journeys, with zero taxable benefit. Electric company cars are taxable on the employee, based on 2% of the list price of the vehicle. However, that benefit also covers the cost of the insurance, servicing and repairs the company incurs in respect of the vehicle.
Providing electric charging points at work so that employees can charge their own or company vehicles is also a tax-free benefit.
Many employers will provide a season ticket loan to help employees pay in advance for their commuting costs, but such interest-free loans (up to £10,000) can be provided for any reason. The loan must be repayable, and a loan agreement should be drawn-up.
Just as directors can receive tax-free gifts worth up to £50 from their company (see page 4), so can employees. Buying
a school uniform for a worker’s child, or surprising them with a food hamper on their birthday, may make a big difference to the family. The £300 annual cap only applies to directors and their family members, not other employees.