Is a benefit taxable if it is also available to the general public?

Not everything provided by an employer to employees, or to members of their family or household, is a taxable benefit. The benefit must provide a profit of some sort. The law recognises the principle of a "fair bargain", something that an employer would also be prepared to provide to anyone "at arm's length", i.e. outside of the direct employment relationship.

Therefore, if an employer provides something for employees that they would have received on exactly the same terms if they had not been employees, there is no benefit or profit to the employees. To be a taxable benefit, employees must get something over and above what the employer gives, or would be prepared to give, to a member of the public or other independent third party. The employer does not actually have to deal with members of the public - it is sufficient that the employer would be prepared to deal with any member of the public on the same terms.

A payment can also be a "fair bargain" where the employer and employee agree on an amount that does no more than compensate for a breach of contract.

Examples of provisions that would be treated as taxable benefits if they were provided only to employees but that are not taxable if they are a "fair bargain" are:

• cash or non-cash vouchers and credit tokens that are provided to employees on no more favourable terms than to the public generally
  
  
• loans that are made to employees on ordinary commercial terms
  
  
• living accommodation provided by a local authority on terms that apply equally to other tenants, i.e. a council house where the rent is not preferential
  
  
• payment of an employee's bank charges where they are incurred because the employer has paid wages late and is therefore in breach of contract
  
  
• a payment made under a compromise agreement, whereby the employee gives up the right to take legal action against the employer.

...UK Payroll News - Latest

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