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Changes to taxable benefits – The good news, the way in which benefits in kind are taxed – company cars, mobile phones, etc. – is unchanged for the tax year just ended, to 5 April 2017. Consequently, you can expect your tax position regarding any benefits you enjoy to be unchanged for 2016-17. This is as long as the benefits themselves have not changed.

However from 6th April 2017 there will be changes to taxable benefits

Unfortunately, from April 2017, the taxman is tightening his grip. Many tax-free benefits will be taxed as if they were part of your salary. This will increase the combined income tax and National Insurance charges in many cases.

A number of benefits are not affected. They will continue to be classified as tax exempt. They are:

  • Cars with emissions between 0 and 75g CO2 per kilometre.
  • Childcare vouchers.
  • Workplace nurseries.
  • Employer pension contributions and pensions advice.
  • Cycles and safety equipment under the cycle to work scheme.
  • Intangible benefits that are not taxed, such as additional annual leave.
  • Counselling and other outplacement services on termination.
  • Retraining courses.

It is fine for employers to continue providing other benefits after 5 April 2017. However there will no longer be any tax or National Insurance benefit in doing so. In other words, the benefits will be treated as if they were part of salary.

As always, when these changes occur there are transitional arrangements. A delay in the date on which the full tax and National Insurance charges will apply from. Where an arrangement is already in place on 6 April 2017, existing legislation will continue until the sooner of:

  • When the arrangements are varied, revised or renewed (including auto-renewal), and
  • 6 April 2021 for cars, vans, fuel, accommodation or school fees, or
  • 6 April 2018 for any other benefit.

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