The provision of counselling by an employer is, in principle, a taxable benefit. A statutory exemption applies to outplacement counselling in connection with termination of employment and a further exemption is available for the "minor benefit" of welfare counselling. The welfare counselling exemption specifically excludes, among other things, the provision of financial advice.

The exemption of minor benefits that are provided generally to employees is a provision of section 210 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA). To date, the minor benefits that have been exempted from a charge to tax are, in addition to welfare counselling,

• meals provided on cycle-to-work days
• the use of a works bus for shopping trips.

Three new "minor benefits" are added to the list from 14 December 2004 by The Income Tax (Exemption of Minor Benefits) (Amendment) Regulations 2004. They have effect from the 2005/06 tax years. They do not apply for the current 2004/05 tax year.

Pension advice: The first is an exemption for the provision of pension information and advice. Until now, that would have fallen into the heading of "financial advice" and would accordingly have been taxable if the employer had contracted with an external provider of training or advice. The exemption is prompted by the Government's desire to raise pension awareness and promote the uptake of additional pensions.

The provision is exempt as long as the cash equivalent of the provision for an individual employee does not exceed £;150 in a tax year. There is no provision to tax only the excess if the cash equivalent of the provision exceeds £;150, so, if the maximum is exceeded, the total amount of the provision is a reportable benefit. Also, as the exemption is made under the provisions of section 210 of ITEPA, the benefit must be generally available to all of an employer's employees.

Recreational benefits: The provision of sporting or other recreational benefits is already exempt from a charge to tax where they are provided generally for all employees of the employer providing the facilities and where they are not generally available to members of the public. The exemption for such employer-provided benefits is set out in section 261 of ITEPA.

However, this exemption does not apply to other people who work on the same premises and who also have access to the same facilities. They are not employees of the employer providing the facilities and, as a result, their use of the facilities is a taxable benefit. However, the new exemption removes the use of another employer's facilities from a charge to tax where the individuals concerned work on that employer's premises.

Subsidised meals: The provision of subsidised meals generally for employees is also already exempt from a tax charge. As with recreational benefits, where individuals who are not employees of the employer providing the benefit but who work on that employer's premises also enjoy the subsidised meals, no charge to tax arises.



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Sources:
www.inlandrevenue.gov.uk/si/2004-3087.pdf
www.inlandrevenue.gov.uk/si/2004-3087em.pdf