In this section:
- Tax for the employed
- Tax for the self-employed
- Work out if you're employed or self-employed
- Starting your first job: what to do about tax
- Tax on casual, part-time or temporary work
- PAYE forms: P45, P46, P60, P11D
- Tax on company cars and other benefits
- Tax on employee share schemes
- Tax on tips and bonuses
- Tax when employing people in your home
Tax on company benefits
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.
On this page:
- Who has to pay tax on company benefits?
- Benefits you might have to pay tax on
- Tax-free benefits
- How the tax is paid
- Your responsibilities
- Where to get help
- More useful links
Who has to pay tax on company benefits?
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.
Benefits you might have to pay tax on
Company cars
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 car's list price, including any accessories
- its carbon dioxide emissions
- the type of fuel it uses
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 will have to pay tax on this as a separate benefit.
Use our online company car and car fuel benefit calculator
Guidance on calculating car and fuel benefits if you complete a tax return (PDF 82K)
Loans at low interest rates
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:
- the interest you actually pay and
- the interest you would've paid at the official rate
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 £5,000 or less.
Help with tax relief on loans if you complete a tax return (PDF 52K)
Living accommodation
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 are provided with the accommodation so you can do your job - or because it helps you do your job better.
Guidance on the benefit of living accommodation if you complete a tax return (PDF 62K)
Medical insurance
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:
- insurance to cover treatment when you're working abroad
- annual check-ups for you
Other benefits
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 us 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.
Tax-free benefits
In certain circumstances you can get some benefits without paying tax on them. Tax-free benefits can include:
- meals provided for all employees in a staff canteen
- drinks and snacks at work
- a mobile phone
- parking at or near your workplace
- Christmas parties
- childcare
How the tax is paid
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).
Tax codes and taxable company benefits
Your responsibilities
Your employer will give you details of the benefits they've told us 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.
Help with completing the employment pages of your tax return (PDF 146K)
Where to get help
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 HM Revenue & Customs (HMRC) Self Assessment Helpline on Tel 0845 900 0444 which is open from 8.00 am to 8.00 pm, seven days a week including bank holidays.
More useful links
Read about tax allowances and reliefs if you're an employee or director
Read about tax allowances and reliefs if you're self-employed
