Financing Car purchase for Employee

How to pay car finance deal for an employee with least affect on their tax/tax credit receipts.

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I want to incentivise a very good trainee.    If I simply pay the monthly repayments on the employee's car purchase that would be classified as additional remuneration subject to tax & NIC so they would loss out on their tax credits, effectively meaning they are worse off than before.   How can I best cover the cost of the car purchase yet (if possible) not cause a reduction in overall household income?

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By Accountant A
18th Jun 2018 11:43

You are providing a benefit which increases his taxable income. If that leaves him worse off, don't do it. Presume you can provide non-taxable benefits? A bike, maybe??

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By Democratus
18th Jun 2018 12:12

This is the problem with Tax credits - there is a payroll/tax credit trap.

Incentives don't have to be monetary, e.g additional holidays may work, and as Accountant A said, try the non taxable benefits available.

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