What are In-kind Benefits?
In-kind benefits are non-monetary benefits offered over or above the employee’s or director’s salary. Some examples are company cars, lunch vouchers, gift coupons. Most in-kind benefits are taxable. They should be declared to the country’s respective revenue institutions.
Types of In-kind Benefits
Since each country has its own rules surrounding taxation of in-kind benefits, it would be unauthentic to differentiate taxable and non-taxable benefits here. The following is the list of both taxable and non-taxable in-kind benefits.
- Accommodation
- Meal plan
- Car allowance
- Medical benefits
- Relocation expense
- Education assistance
- Retirement benefits
- Entertainment expenses
Accommodation
Job Accommodation Network, a human resource development organization, reported that 75% of their 986 respondents said the company accommodations for employees were either very effective or highly effective.
Accommodation includes:
- A house, flat, or home unit
- Accommodation in a hotel, motel, guesthouse, bunkhouse, or other living quarters
- A caravan or mobile home
- Accommodation on a ship or other floating structure
According to the employers, the most frequently mentioned benefits are:
- The accommodation allowed the company to retain a valued employee
- The housing increased the employee’s productivity
- The accommodation eliminated the costs of training a new employee.
These employee benefits also help employees decrease taxes. Moreover, they help them retain a fat chunk of their paycheck, one of the most significant expenses for the average citizen.
Meal plan
Several companies offer discounts and coupons for meals when employees are in-office. According to SHRM, in 2017, 76% of companies offered a travel per diem or meal reimbursement, up from 70% in 2013; 9% covered minibar purchases.
This shows the importance of accommodating employee expenses around meals and non-entertainment food expenses. Such benefits entice millennials who choose employers who boast of offering such benefits.
They also position you as an employer who is increasingly concerned about people’s well-being. The Guardian Workplace Study reports that 55% of workers who feel their employer cares about their well-being want to stay at their company for ten years or more. 33% of the survey respondents blatantly responded that they don’t believe their company cares.
Car allowance
Car allowances fall under the taxable in-kind benefits in most countries. In some countries, cars given by companies for work purposes aren’t taxed.
However, most employees abuse this benefit by using company cars for personal reasons. This is why, reportedly, 87% of companies will reimburse traveling employees for taxis or parking. Moreover, 80% of employers grant mileage reimbursement for using a personal car to travel to and from the airport.
Medical benefits
According to an AHIP report, 75% of adults responded that employer-provided coverage would protect them from the majority of their medical costs in case of emergency. Employees prefer fully paid medical insurance, a four-day workweek, and fully paid dental insurance.
Treatment for mental health is also rising in priority for many workers of the post-Covid workforce.
As of a study by SHRM in 2020, 32% of employers had allocated more resources for mental health benefits in direct response to Covid-19. Even Mckinsey published a report titled “Mental Health: An upcoming revolution,” emphasizing the importance of including mental health programs as part of medical insurance and corporate programs.
Thus insurance mental healthcare needs to be a part of your employee’s in-kind benefits. You also go the mile by easing access to mental health services. Organizing camps, recruiting therapists, encouraging activities to alleviate stress can go a long way in proving your empathy.
Relocation expenses
Employees receive reallocation allowances when they relocate for work. Many multinational companies offer this in-kind benefit to attract talent from another place. According to a survey conducted by Robert Half in 2019, 30% of companies do not provide any relocation incentives.
Are you looking for employees away from your home country? Let us help! Multiplier’s employer of record services helps you employ and onboard talent from 150+ countries. Using our local entities and our SaaS-based onboarding solution, seamlessly employ and manage distributed teams and build the best team on the planet.
Education assistance
82% of workers said their continued education, made possible by an employer’s tuition reimbursement program, made them more effective employees.
Educational allowances are one of the most in-kind benefits an employer can offer. Particularly among millennials, this benefit is a highly sought-after in-kind benefit. According to HR tech company Bridge, offering career training and development would keep 86% of millennials from leaving their current position.
Moreover, this in-kind employment benefit favors employers as well. Reimbursing the educational ventures of ambitious candidates would encourage employees to be more loyal.
Training employees as a part of their work will also enable them to acquire new skills. By developing gainful skills, employees would, in turn, contribute more to your organization.
Retirement benefits
According to an HRdive survey, 40% of employees don’t think about retirement until they retire. Thus be the emphatic employer for deserving employees and start thinking about offering a retirement plan for their benefits in kind.
Employers can offer retirement benefits such as a private pension plan to employees who have served a long term. Now, at retirement age, they get financial support from these schemes.
Family and childcare benefits
The pandemic has illustrated the importance of family and community. However, it also burdened parents by locking them indoors, making them prone to their children’s antics.
The rise of remote work, the closure of schools and subsequent remote learning, and the difficulty of physically isolating within family units burdened working families.
Benefits of in-kind benefits
There are several advantages to offering in-kind benefits. Aside from tax benefits, offering benefits-in-kind allows employees to spend less to avail themselves of essential services like housing, travel, meals, healthcare, etc.
Here are some advantages of in-kind benefits:
- Improve employee engagement
- A sound recruitment strategy
- Improves employee retention
- Boosts the morale of employees
- Promotes the mental well-being of employees
- Tax benefits
Improve employee engagement
Offering benefits-in-kind improves employee engagement and results in increased employee loyalty. Mainly, offering education and tuition reimbursements helps employees incline their career goals with the company’s goals.
Recruitment strategy
Employee benefits are increasingly considered a deal-breaker when choosing whom to work with. According to a study published in Harvard Business Review, 80% of employees choose additional benefits over a pay raise.
Offering benefits-in-kind is an intelligent way to recruit employees. Not many employees offer in-kind benefits for employers.
Moreover, in-kind benefits are simply a game-changer to attract employees to fill your C-suite.
They say the first ten employees of your company make or break your venture. Being generous and emphatic by offering benefits-in-kind can help you source the best talent.
Improves Employee retention
As stated earlier, certain kinds of in-kind benefits improve trust and loyalty. Retirement plans, stock options, bonuses, pensions, healthcare plans encourage your employee to stay true to their company.
Not many say this, but in-kind benefits help your employee take their mind of basic yet crucial services. An employee whose retirement is covered need not worry much about saving plans. An employee whose travel requirements are met will not consider choosing another employer over you who probably is picky on offering benefits.
Remember, not all employees are the same. Empathy is key.
Boosts the morale of employees
Just think about an employee who enjoys free rides to the office. As they do their work dutifully and break off for lunch, an employee whose lunch is subsidized need not dig deep into their wallets. Similarly, a robust private insurance plan will save the trouble of saving money for emergencies.
By offering such in-kind benefits, employees prevail over trivial aspects of their lives and focus more on their work and career goals.
Boosts the mental well-being of employees
Mental well-being is not only staying happy, positive, and productive. It also refers to thinking with clarity, good sleep, healthy relationships, etc.
Poor mental well-being at the workplace results in increased absenteeism and decreased productivity. The organization is affected as a whole.
For instance, Johnson and Johnson has been a forerunner in this case. The company’s mental healthcare coverage extends not only to employees but also to their families. They also have a team of 1,000+ employees to cater to employees’ mental health problems and can discharge mental health first aid.
Tax benefits
Some in-kind benefits are not taxable.
Notably, the Fair labor standards Act has eased offering benefits in the USA. Many perks, such as wellness plans, cell phone reimbursements, and parking benefits, are no longer considered part of an employee’s pay, so they are not subject to taxes.
Law & Tax Policy for Benefits in Kind
As stated earlier, the law and tax policy for in-kind benefits are different in each country. In most countries, pension contributions are tax-free.
Some countries levy taxes on relocation expenses, accommodation, etc. For example, employees in the UK have to report accommodation benefits for the tax unless the accommodation is part of HRMC. In some cases, if the housing is provided to evade security risks, then these benefits wouldn’t be taxed.
Employees are advised to research the topic before they acquire these benefits deeply.
Frequently Asked Questions
Are benefits in kind taxable?
Benefits that are susceptible to personal use or gains are taxable. Some benefits of these benefits such as:
- A company car
- Private health insurance
- Assets provided to an employee that have significant personal use
- Home phones with personal use
- Non-business travel expenses
- Non-business entertainment expenses
Is offering benefits in kind worth it?
Offering benefits in kind has several advantages: improving employee morale, attracting better talent, employee retention, low employee attrition, and taxes.
Can benefits in kind be payrolled?
Mostly, it is the taxable benefits that you must payroll. However, this can vary with the norms of each country.
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What are In-kind Benefits?
In-kind benefits are non-monetary benefits offered over or above the employee’s or director’s salary. Some examples are company cars, lunch vouchers, gift coupons. Most in-kind benefits are taxable. They should be declared to the country’s respective revenue institutions.
Types of In-kind Benefits
Since each country has its own rules surrounding taxation of in-kind benefits, it would be unauthentic to differentiate taxable and non-taxable benefits here. The following is the list of both taxable and non-taxable in-kind benefits.
- Accommodation
- Meal plan
- Car allowance
- Medical benefits
- Relocation expense
- Education assistance
- Retirement benefits
- Entertainment expenses
Accommodation
Job Accommodation Network, a human resource development organization, reported that 75% of their 986 respondents said the company accommodations for employees were either very effective or highly effective.
Accommodation includes:
- A house, flat, or home unit
- Accommodation in a hotel, motel, guesthouse, bunkhouse, or other living quarters
- A caravan or mobile home
- Accommodation on a ship or other floating structure
According to the employers, the most frequently mentioned benefits are:
- The accommodation allowed the company to retain a valued employee
- The housing increased the employee’s productivity
- The accommodation eliminated the costs of training a new employee.
These employee benefits also help employees decrease taxes. Moreover, they help them retain a fat chunk of their paycheck, one of the most significant expenses for the average citizen.
Meal plan
Several companies offer discounts and coupons for meals when employees are in-office. According to SHRM, in 2017, 76% of companies offered a travel per diem or meal reimbursement, up from 70% in 2013; 9% covered minibar purchases.
This shows the importance of accommodating employee expenses around meals and non-entertainment food expenses. Such benefits entice millennials who choose employers who boast of offering such benefits.
They also position you as an employer who is increasingly concerned about people’s well-being. The Guardian Workplace Study reports that 55% of workers who feel their employer cares about their well-being want to stay at their company for ten years or more. 33% of the survey respondents blatantly responded that they don’t believe their company cares.
Car allowance
Car allowances fall under the taxable in-kind benefits in most countries. In some countries, cars given by companies for work purposes aren’t taxed.
However, most employees abuse this benefit by using company cars for personal reasons. This is why, reportedly, 87% of companies will reimburse traveling employees for taxis or parking. Moreover, 80% of employers grant mileage reimbursement for using a personal car to travel to and from the airport.
Medical benefits
According to an AHIP report, 75% of adults responded that employer-provided coverage would protect them from the majority of their medical costs in case of emergency. Employees prefer fully paid medical insurance, a four-day workweek, and fully paid dental insurance.
Treatment for mental health is also rising in priority for many workers of the post-Covid workforce.
As of a study by SHRM in 2020, 32% of employers had allocated more resources for mental health benefits in direct response to Covid-19. Even Mckinsey published a report titled “Mental Health: An upcoming revolution,” emphasizing the importance of including mental health programs as part of medical insurance and corporate programs.
Thus insurance mental healthcare needs to be a part of your employee’s in-kind benefits. You also go the mile by easing access to mental health services. Organizing camps, recruiting therapists, encouraging activities to alleviate stress can go a long way in proving your empathy.
Relocation expenses
Employees receive reallocation allowances when they relocate for work. Many multinational companies offer this in-kind benefit to attract talent from another place. According to a survey conducted by Robert Half in 2019, 30% of companies do not provide any relocation incentives.
Are you looking for employees away from your home country? Let us help! Multiplier’s employer of record services helps you employ and onboard talent from 150+ countries. Using our local entities and our SaaS-based onboarding solution, seamlessly employ and manage distributed teams and build the best team on the planet.
Education assistance
82% of workers said their continued education, made possible by an employer’s tuition reimbursement program, made them more effective employees.
Educational allowances are one of the most in-kind benefits an employer can offer. Particularly among millennials, this benefit is a highly sought-after in-kind benefit. According to HR tech company Bridge, offering career training and development would keep 86% of millennials from leaving their current position.
Moreover, this in-kind employment benefit favors employers as well. Reimbursing the educational ventures of ambitious candidates would encourage employees to be more loyal.
Training employees as a part of their work will also enable them to acquire new skills. By developing gainful skills, employees would, in turn, contribute more to your organization.
Retirement benefits
According to an HRdive survey, 40% of employees don’t think about retirement until they retire. Thus be the emphatic employer for deserving employees and start thinking about offering a retirement plan for their benefits in kind.
Employers can offer retirement benefits such as a private pension plan to employees who have served a long term. Now, at retirement age, they get financial support from these schemes.
Family and childcare benefits
The pandemic has illustrated the importance of family and community. However, it also burdened parents by locking them indoors, making them prone to their children’s antics.
The rise of remote work, the closure of schools and subsequent remote learning, and the difficulty of physically isolating within family units burdened working families.
Benefits of in-kind benefits
There are several advantages to offering in-kind benefits. Aside from tax benefits, offering benefits-in-kind allows employees to spend less to avail themselves of essential services like housing, travel, meals, healthcare, etc.
Here are some advantages of in-kind benefits:
- Improve employee engagement
- A sound recruitment strategy
- Improves employee retention
- Boosts the morale of employees
- Promotes the mental well-being of employees
- Tax benefits
Improve employee engagement
Offering benefits-in-kind improves employee engagement and results in increased employee loyalty. Mainly, offering education and tuition reimbursements helps employees incline their career goals with the company’s goals.
Recruitment strategy
Employee benefits are increasingly considered a deal-breaker when choosing whom to work with. According to a study published in Harvard Business Review, 80% of employees choose additional benefits over a pay raise.
Offering benefits-in-kind is an intelligent way to recruit employees. Not many employees offer in-kind benefits for employers.
Moreover, in-kind benefits are simply a game-changer to attract employees to fill your C-suite.
They say the first ten employees of your company make or break your venture. Being generous and emphatic by offering benefits-in-kind can help you source the best talent.
Improves Employee retention
As stated earlier, certain kinds of in-kind benefits improve trust and loyalty. Retirement plans, stock options, bonuses, pensions, healthcare plans encourage your employee to stay true to their company.
Not many say this, but in-kind benefits help your employee take their mind of basic yet crucial services. An employee whose retirement is covered need not worry much about saving plans. An employee whose travel requirements are met will not consider choosing another employer over you who probably is picky on offering benefits.
Remember, not all employees are the same. Empathy is key.
Boosts the morale of employees
Just think about an employee who enjoys free rides to the office. As they do their work dutifully and break off for lunch, an employee whose lunch is subsidized need not dig deep into their wallets. Similarly, a robust private insurance plan will save the trouble of saving money for emergencies.
By offering such in-kind benefits, employees prevail over trivial aspects of their lives and focus more on their work and career goals.
Boosts the mental well-being of employees
Mental well-being is not only staying happy, positive, and productive. It also refers to thinking with clarity, good sleep, healthy relationships, etc.
Poor mental well-being at the workplace results in increased absenteeism and decreased productivity. The organization is affected as a whole.
For instance, Johnson and Johnson has been a forerunner in this case. The company’s mental healthcare coverage extends not only to employees but also to their families. They also have a team of 1,000+ employees to cater to employees’ mental health problems and can discharge mental health first aid.
Tax benefits
Some in-kind benefits are not taxable.
Notably, the Fair labor standards Act has eased offering benefits in the USA. Many perks, such as wellness plans, cell phone reimbursements, and parking benefits, are no longer considered part of an employee’s pay, so they are not subject to taxes.
Law & Tax Policy for Benefits in Kind
As stated earlier, the law and tax policy for in-kind benefits are different in each country. In most countries, pension contributions are tax-free.
Some countries levy taxes on relocation expenses, accommodation, etc. For example, employees in the UK have to report accommodation benefits for the tax unless the accommodation is part of HRMC. In some cases, if the housing is provided to evade security risks, then these benefits wouldn’t be taxed.
Employees are advised to research the topic before they acquire these benefits deeply.
Frequently Asked Questions
Are benefits in kind taxable?
Benefits that are susceptible to personal use or gains are taxable. Some benefits of these benefits such as:
- A company car
- Private health insurance
- Assets provided to an employee that have significant personal use
- Home phones with personal use
- Non-business travel expenses
- Non-business entertainment expenses
Is offering benefits in kind worth it?
Offering benefits in kind has several advantages: improving employee morale, attracting better talent, employee retention, low employee attrition, and taxes.
Can benefits in kind be payrolled?
Mostly, it is the taxable benefits that you must payroll. However, this can vary with the norms of each country.
