Research and analysis

Research with employers on Benefits in Kind and expenses

Published 27 May 2025

Prepared by IFF Research for HM Revenue and Customs

Research report number: 751

October 2023

The views in this report are the author’s own and do not necessarily reflect those of HM Revenue and Customs

Glossary

Term	Definition
Benefits in Kind	A non-cash benefit of monetary value that an employer can provide to an employee. As the benefit is part of the employee’s income, Benefits in Kind are subject to taxation unless there is a specific exemption. Cycle to Work is one such exemption.
Expenses	Costs incurred by employees when carrying out their job, which an employer can choose to reimburse. Examples of reimbursed expenses could include professional fees or mileage payments.
Employee Car Ownership Schemes (ECOS)	Broadly, an employee car ownership scheme (also called an employee car purchase scheme and by various similar names) is a set of arrangements whereby employees acquire cars from a specified, often single source and within a specified financing framework.
National Insurance contributions (NICs)	Contributions an individual makes to receive certain UK benefits and the UK State Pension. Employees and self-employed individuals aged over 16 pay a proportion of their earnings or self-employed profits when earning over £242 a week for employees, or £11,908 a year for self-employed workers. Employers also make a contribution on behalf of their employees.
P11D	This is a way of reporting taxable expenses or benefits to HMRC. Employers must submit a separate report (a P11D) to HMRC for each employee they’ve provided with taxable expenses or benefits that were not payrolled. The P11D form is submitted online at the end of the tax year.
Payrolling	‘Payrolling’ means when you use payroll software, as opposed to a P11D form, to report to HMRC the Benefits in Kind that you provide to your employees. If you pay employee expenses and benefits through your payroll, you report them online and pay tax on them throughout the year.
Salary sacrifice	An arrangement whereby an employee agrees to give up part of their pre-tax salary in exchange for a benefit from their employer, in this case, the hire of a bicycle for active travel or safety equipment.
Trivial benefits	When a benefit costs £50 or less to provide, isn’t cash or a cash voucher, isn’t a reward for work or performance and isn’t in the terms of an employee’s contract, then an employer is not required to pay tax. This is known as a ‘trivial benefit’.

1. Executive summary

1.1 Background

HM Revenue and Customs (HMRC) commissioned IFF Research to undertake research on Benefits in Kind offered and expenses reimbursed by employers.

Remuneration for employees takes many forms. In addition to paid wages or salary, employers frequently offer non-cash remuneration to employees, including taxable and non-taxable Benefits in Kind and expenses.

1.2 Research aims and method

The overall objective of this research was to better understand the current and future use of Benefits in Kind and expenses, including understanding the incidence of employers offering a range of Benefits in Kind and expenses of interest to HMRC (this wasn’t exhaustive of all benefits and expenses that could be offered and reimbursed).

IFF Research conducted a quantitative telephone survey consisting of 1,496 interviews with employers of varied business size and industry sector between 7 November 2022 and 20 January 2023. The survey was designed to be representative of the population of employers.

After the quantitative survey, 30 follow-up in-depth interviews were conducted with a range of employers that took part in the survey. Qualitative fieldwork took place between 13 January and 15 March 2023, and interviews were carried out via Microsoft Teams or via telephone. Interviews lasted up to an hour. 

1.3 Key findings

Prevalence of offering Benefits in Kind and reimbursing expenses

More than half of employers (59%) said they reimbursed any expenses to employees, and around a quarter (27%) said they offered any Benefits in Kind.

Larger employers were much more likely to say they reimbursed expenses and offered any Benefits in Kind. Nearly all employers with 50 or more employees said they reimbursed expenses (90% of medium and 98% of large employers), and more than half said they also offered Benefits in Kind (64% of medium and 72% of large employers).

Benefits in Kind explored in the survey

Employers were asked which Benefits in Kind they offered their employees out of a range of benefits of interest to HMRC. As shown in Figure 1, the most common of these Benefits in Kind were workplace parking (13%), company cars or vehicles (12%) and the loan of a bicycle (5%). Medium and large employers were significantly more likely than employers overall to offer most of the Benefits in Kind explored in the survey. An asterisk (*) denotes a statistically significant difference from all employers.

Figure 1: Benefits in Kind offered by employers

Type of Benefit in Kind	Proportion of all employers who said they offered the benefit (unweighted base; 1,496)	Proportion of medium and large employers who said they offered the benefit (unweighted base: 407)
Childcare vouchers	4%	23%*
Nursery or playscheme provision at the workplace	<1%	<1%
Nursery or playscheme provision off-site	<1%	0%
Loan of a bicycle, such as through a Cycle to Work Scheme	5%	23%*
Workplace parking for motor vehicles, motorbikes or bicycles	13%	39%*
Specific support for disabled people to travel between home and work, including adapted cars	1%	1%
Company car or other company vehicle	12%	29%*
Electric vehicle battery charging at workplace	4%	20%*
Medical treatment to help an employee return to work	4%	14%*
Medical treatment outside the UK, when an employee falls sick when abroad	1%	2%
Employee Assistance Programmes	4%	21%*
Welfare counselling not covered by an Employee Assistance Programme	2%	12%*
Employment costs relating to disabilities	1%	8%*
Outplacement counselling for redundant employees	2%	7%*
Employer provided accommodation	1%	4%*
Reimbursement of relocation costs	1%	5%*
Employer provided loans	2%	3%
Provision of pensions advice	3%	4%
Sporting or other recreational facilities on premises your organisation owns	1%	2%
Sporting or other recreational facilities on premises your organisation rents	<1%	1%
Retraining expenditure related to employees leaving your employment under a redundancy deal	1%	3%

The most common reasons employers gave for offering Benefits in Kind to their employees were that it helps retain staff (38%) and improves staff health and wellbeing (38%). Employee retention, the health and wellbeing of staff, staff satisfaction, and employee recruitment were the most common reasons employers gave for offering Benefits in Kind in the qualitative interviews. The hope was that, by improving health and wellbeing and staff satisfaction, this would result in better attendance and less staff sickness.

Most employers could not think of any particular difficulties with providing the benefits they currently offer.

Salary sacrifice for Benefits in Kind

Most employers said they did not offer Benefits in Kind through salary sacrifice (90%), with less than one in ten offering it (8%). It was more prevalent among medium and large employers, with roughly a quarter offering Benefits in Kind through salary sacrifice (26%). Small employers were less likely to offer it at 5%.

Employers offering Benefits in Kind through salary sacrifice were asked what proportion of their employees in receipt of these benefits were basic rate, higher rate, and additional rate taxpayers. On average, these employers said that around half were basic rate taxpayers (51%), around one fifth were higher rate taxpayers (21%), and 4% were additional rate taxpayers.

Half of employers offering Benefits in Kind through salary sacrifice did so to all staff, including hourly paid staff (50%). Just over two-fifths of employers (43%) offered it to all salaried staff. A minority of employers said they only offered Benefits in Kind through salary sacrifice to directors, or middle managers and above.

Employers offering Benefits in Kind through salary sacrifice reported that salary sacrifice was effective in incentivising employees to take up Benefits in Kind. Around two-thirds (67%) said it was very effective (31%) or fairly effective (36%), with only 3% of employers feeling it wasn’t effective at all.

In the qualitative interviews, employers noted that the key advantage of offering Benefits in Kind through salary sacrifice was reducing the cost of offering the benefit for the employer, as they can save on National Insurance contributions. Employers also noted that the salary sacrifice arrangement also enables employees to reduce the amount of tax they pay, saving them money (compared to accessing the benefit in the open market).

Employers did not highlight many challenges of providing benefits through salary sacrifice, though some employers raised the issue regarding employees on minimum wage: whilst employers wanted to offer Benefits in Kind to these employees, they were unable to do so using salary sacrifice as this would reduce below the threshold according to HMRC rules.

Expenses

Employers were asked which expenses they reimbursed for their employees out of a range of taxable, non-taxable, and exempt expenses of interest to HMRC. As shown in Figure 2, the most common expenses that were reimbursed in the survey by employers were miscellaneous items purchased for the company on the company’s request (38%), other subsistence expenses, such as accommodation when staying overnight on business (33%) and refreshments when attending meetings outside of the office (28%).

The survey results show that not all employers reimburse expenses. In the qualitative interviews, most employers who said they did not reimburse the expenses included in Figure 2 explained that this was because these expenses were irrelevant to their line of work. In other words, their employees would not incur the expense in the first place.

Figure 2: Expenses reimbursed by employers

Type of expenses	Proportion of employers who said they reimbursed the expense (unweighted base: 1,496)
Refreshments when attending meetings outside of the office	33%
Other subsistence expenses, such as accommodation when staying overnight on business	34%
Any other incidental employee expenses	23%
Passenger payments, for carrying passengers in their own car	5%
Professional fees, to be a member of a body which is required for the job	25%
Professional subscriptions, which are not compulsory, but relevant for the job	19%
Homeworking expenses	12%
Uniform washing	5%
Other PPE or clothing	19%
Tools	15%
Miscellaneous items purchased for the company on the company’s request (items not already covered in the expenses above)	40%

Similarly to the Benefits in Kind offered, medium and large employers were significantly more likely to fully reimburse the majority of the expenses explored in the survey, compared to employers overall.

In the qualitative interviews, most employers stated that the main reason they reimburse their employees’ expenses was because it was simply the “right thing to do” if the cost was incurred due to the nature of the business, for example travelling to a client. Aside from this, the most common reasons employers gave for reimbursing employee expenses in the survey were that it improves staff satisfaction at work (45%) and that it helps retain staff (42%).

Most employers could not think of any specific challenges or difficulties faced with reimbursing expenses to employees.

2. Introduction

2.1 Background and objectives

HM Revenue and Customs (HMRC) commissioned IFF Research to undertake research on Benefits in Kind offered and expenses reimbursed by employers.

Remuneration for employees takes many forms. In addition to paid wages or salary, employers frequently offer non-cash remuneration to employees, including taxable and non-taxable Benefits in Kind and expenses.

The type and value of benefits offered is often in response to employment market trends, for example, employers ensuring that their benefits package is as (or more) attractive than their peers and competitors. However, external events, such as the COVID-19 pandemic, have also increased internal and external pressure on employers to review the adequacy of their healthcare and risk benefits, such as occupational sick pay, as well as their overall financial and mental support for their staff, such as for those who have had to shield at home.

From a taxation point of view, the assumption is that each benefit has a value and will therefore be subject to tax. In this case, the tax is based on the cost to the employer of providing them, or for cars, assets, loans and accommodation, the valuation that the employer places on them. The value of the benefit is added to the cash value of an employees’ salary and taxed accordingly at their marginal rate. Employers can offer Benefits in Kind through Salary Sacrifice, however in April 2017 the advantages of salary sacrifice were withdrawn for most Benefits in Kind but remain for pensions, childcare, Ultra Low Emission Vehicles and the provision of cycles and cycle safety equipment.

Use of Benefits in Kind in employee remuneration is widespread. Previous research conducted with employees found that more than four-fifths (84%) of all employees were offered at least 1 non-taxable Benefit in Kind by their employer.  Meanwhile the total number of reported recipients of company car benefit was 720,000, which equates to a total taxable value of £4.62 billion. 

2.2 Research objectives

The overall objective of this research was to provide HMRC with an understanding of the current and future use of Benefits in Kind and reimbursement of expenses by employers. The research aimed to answer the following questions:

• what is the prevalence of employers offering Benefits in Kind and reimbursing expenses?
• what Benefits in Kind are offered by employers?
• what expenses are reimbursed by employers?
• what are the motivations for offering Benefits in Kind and reimbursing expenses?
• are there any challenges of offering Benefits in Kind and reimbursing expenses? If so, what are these?
• what are employers’ future intentions of offering Benefits in Kind and reimbursing expenses?

2.3 Methodology

The research consisted of 2 strands: a survey, and qualitative in-depth interviews. Each strand is discussed in turn below, and further detail is included in the Technical Appendix.

Survey

A random probability survey of employers was conducted, including interviews with 1,496 employers of different business sizes and industry sectors. The mainstage fieldwork took place between 7 November 2022 and 20 January 2023. A pilot survey was conducted between 17 August and 1 September 2022. Interviews lasted around 25 minutes on average.  

For both the pilot and mainstage fieldwork stages, HMRC provided a random sample of employer records. IFF conducted a telephone matching exercise using contact details from a third-party source to provide additional telephone numbers, in order to maximise the response. In the interest of producing generalisable findings by employer size, medium and large sized employers were oversampled. Weighting was then carried out on the final survey data to produce a dataset representative of the sampling frame, allowing inferences to be drawn regarding the population of employers as a whole.

During the survey, employers could be interviewed about up to 5 Benefits in Kind (from a total of 21 of interest to HMRC), in addition to their experience of reimbursing expenses. A maximum of 5 Benefits in Kind were discussed in order to ensure the survey was not too long which would have resulted in employers being less likely to take part.

Figure 3 shows the number of employers that took part in the survey that offered Benefits in Kind and expenses, referred to as a full interview, split by size of business. It also shows the number of short interviews conducted with employers that confirmed they did not offer their employees Benefits in Kind nor reimbursed their expenses.

Figure 3: Profile of survey respondents by size who completed a full interview or short interview

Size of employer sampled for the survey (number of employees)	Full interview with employers who offered Benefits in Kind and expenses	Short interview with employers who did not offer Benefits in Kind and expenses	Total completed interviews
Small (1 to 49 employees)	652	437	1,089
Medium (50 to 249 employees)	216	21	237
Large (250 or more employees)	162	8	170

Qualitative research

Following the quantitative survey, IFF Research carried out 30 in-depth interviews with a range of employers. Qualitative fieldwork took place between 13 January and 15 March 2023, and interviews were carried out via Microsoft Teams or via telephone. Interviews lasted up to an hour. All participants had previously completed the survey and had consented to being contacted to take part in further qualitative research. Employers were selected for recruitment based on their responses to the survey questions, such as if they offered company cars or provided Benefits in Kind through salary sacrifice.

The main aims of the qualitative follow-up interviews were to build on employers’ answers to the survey in more detail and to get a clearer picture of employers’ understanding of Benefits in Kind, the benefits and challenges of offering them and their future intentions surrounding benefits and expenses.

The profile of employers that took part in the follow-up qualitative interviews can be found in Appendix 1. The topic guide used for the interviews is in Appendix 3.

2.4 Reporting conventions

Quantitative findings

Due to the small number of employers offering certain Benefits in Kind, survey results with a base size under 50 have not been reported. Warnings have been included where base sizes are between 50 to 100 to highlight that the findings should be considered indicative only.

Employers were asked to provide an estimated cost of providing the different Benefits in Kind and their associated market value. Many employers felt unable to provide an accurate figure or, in some cases, an estimation at all. In addition, although every effort was made to ensure the survey questions were as easily and widely understood as possible, respondent knowledge and recall of their Benefits in Kind may in some cases be incomplete or subject to misunderstanding.

All differences stated in this report between sub-groups are statistically significant at the 95% confidence level, and are demonstrated in the tables and charts using an asterisk (*).

For multi-response questions, the sum of the total responses may exceed 100%. This is because an employer could provide more than 1 response, and responses are not mutually exclusive. For single-response questions, the sum of all responses may not add up to 100% due to rounding. For example, a response may represent a percentage of 77.54% and this will be rounded up to 78%.

Qualitative findings

The purpose of the qualitative research is to provide an in-depth understanding of employers’ motivations for offering Benefits in Kind and concerns around administration. It is not intended to be statistically representative, and therefore findings should not be generalised to the population of employers offering specific Benefits in Kind.

3. Prevalence of offering Benefits in Kind and reimbursing expenses

This chapter explores the prevalence of employers offering Benefits in Kind and reimbursing expenses.

3.1 Proportion offering Benefits in Kind and reimbursing expenses

Employers that took part in the survey were initially asked if they offered any type of Benefit in Kind and if they reimbursed any expenses to their employees. However, despite conducting cognitive testing and a pilot of the survey, as the mainstage fieldwork progressed it became clear there was uncertainty among some employers on their interpretation of Benefits in Kind and expenses. This led to the questionnaire evolving. More details can be found in the section on mainstage fieldwork in Appendix 1.

The questionnaire ultimately asked employers if they offered any Benefits in Kind and reimbursed any expenses up-front. It then moved on to ask them about specific Benefits in Kind and expenses of interest to HMRC, even if employers initially reported not offering or reimbursing them. When employers were asked about specific Benefits in Kind and expenses, more employers acknowledged offering or reimbursing them to employees.

Therefore, the estimations for the proportion of employers offering any Benefits in Kind and reimbursing any expenses, as seen in Figure 4, are produced from:

• the proportion offering at least 1 of 21 specific non-taxable benefits listed in the survey
• the proportion offering at least 1 of 13 specific types of expense payments listed in the survey, excluding ‘items purchased for the company on request of the company’ as it was not viewed as an expense by most employers

Upon these estimations, employers were more likely to reimburse expenses than offer Benefits in Kind: a third (34%) offered expenses only, a quarter (25%) offered both Benefits in Kind and expenses, a minority at 2% offered Benefits in Kind only and 39% reported offering neither.

Figure 4: Whether employers offered Benefits in Kind and reimbursed expenses

Type of Benefits in Kind and expenses arrangement	% of employers who offered each arrangement
Offered Benefits in Kind only	2%
Offered Benefits in Kind and reimbursed expenses	25%
Reimbursed expenses only	34%
Neither offered Benefits in Kind nor reimbursed expenses	39%

Unweighted base: all employers who completed the short interview to identify whether they offered Benefits in Kind or reimbursed expenses (1,496). Estimated distribution based using A6, A6a, A6b, B1, B2, C2, C3 and C4a, however, not all those stating they did not offer Benefits in Kind/reimburse expenses were asked in further detail.

3.2 Proportion offering Benefits in Kind and reimbursing expenses by size of business

As shown in Figure 5, medium and large employers were significantly more likely to offer Benefits in Kind and reimburse expenses than small employers. For small employers, only a quarter (25%) offered any type of Benefit in Kind, compared to nearly two-thirds (64%) of medium employers and nearly three-quarters (72%) of large employers. A larger proportion of small employers reimbursed expenses at nearly 6 in 10 (57%), however, this was still significantly smaller compared to 9 in 10 medium employers (90%) and 98% of large employers.

Figure 5: Employers who offered Benefits in Kind and reimbursed expenses by business size

Size of employer	Offered Benefits in Kind only	Offered Benefits in Kind and reimbursed expenses	Reimbursed expenses only	Neither offered Benefits in Kind nor reimbursed expenses	Total
Small (1 to 49 employees)	2%	23%	34%	41%	100%
Medium (50 to 249 employees)	4%	60%	30%	6%	100%
Large (250 or more employees)	0%	72%	26%	2%	100%

Unweighted base: all employers who completed the short interview to identify whether they offered Benefits in Kind or reimbursed expenses by size: small-sized employers (1,089), medium-sized employers (237), and large-sized employers (170).

3.3 Trivial benefits

The qualitative interviews explored employers’ understanding and awareness of trivial benefits, and whether or not they offered any at the time of interview.

Most employers were aware of trivial benefits and many, though not all, offered some form of trivial benefits to their employees.

Some employers reported they were not aware of trivial benefits, but after being provided with an explanation during the interview of what defines a trivial benefit they realised they did offer some and were simply unaware they were described as ‘trivial benefits’. Additionally, of those who were unaware of what trivial benefits were even after hearing the explanation, most felt that this was due to them not being applicable to their type of work.

Of those employers that reported offering trivial benefits, these included: fruits, milk, tea and coffee in the office; birthday or retirement cakes and cards; team building social events; and the annual Christmas party/meal. Whilst not a common finding, one employer mentioned that since the pandemic most employees worked remotely from home, so they have a monthly company lunch to bring the team together. All employers offering trivial benefits noted that they were paid for directly by the business through a company credit card.

Of those employers who were aware of trivial benefits, some were able to provide their own definition of trivial benefits.

“Trivial benefits are those that sit within HMRC’s guidance. Like a one-off but not seen fully as a benefit, for example newspapers in a hotel, we would expect them to pay for that themselves unless they were buying it to take to a meeting.” (Large employer, Financial and Insurance Activities sector)

“They have to be under £50 and not a cash benefit.” (Medium employer, Water Supply, Sewerage, Waste Management and Remediation Services sector)

“An inexpensive treat the company decides to give as a thank you.” (Small employer, Wholesale Retail sector)

4. Benefits in Kind explored in the survey

This chapter explores the specific Benefits in Kind of interest to HMRC that were explored in the survey, including the average proportion of their employees taking up each benefit and the costs associated with offering these. The chapter also explores employers’ reasons for offering specific Benefits in Kind, any challenges of offering them, whether COVID-19 has had an impact on their offering, and finally their future intentions for offering Benefits in Kind.

4.1 Proportion of Benefits in Kind offered and taken-up

As shown in Figure 6, the most common Benefits in Kind explored in the survey that employers said they offered were workplace parking (13%), company cars or vehicles (12%) and the loan of a bicycle (5%). The other Benefits in Kind were offered by less than 5% of employers. Medium and large employers were significantly more likely than employers overall to offer most of the Benefits in Kind explored in the survey. An asterisk (*) denotes a statistically significant difference from all employers.

Figure 6: Proportion of employers who said they offered specific Benefits in Kind

Type of Benefit in Kind	Proportion of all employers who said they offered the benefit (unweighted base: 1,496)	Proportion of medium and large employers who said they offered the benefit (unweighted base: 407)
Childcare vouchers	4%	23%*
Nursery or playscheme provision at the workplace	<1%	<1%
Nursery or playscheme provision off-site	<1%	0%
Loan of a bicycle, such as through a Cycle to Work Scheme	5%	23%*
Workplace parking for motor vehicles, motorbikes or bicycles	13%	39%*
Specific support for disabled people to travel between home and work, including adapted cars	1%	1%
Company car or other company vehicle	12%	29%*
Electric vehicle battery charging at workplace	4%	20%*
Medical treatment to help an employee return to work	4%	14%*
Medical treatment outside the UK, when an employee falls sick when abroad	1%	2%
Employee Assistance Programmes	4%	21%*
Welfare counselling not covered by an Employee Assistance Programme	2%	12%*
Employment costs relating to disabilities	1%	8%*
Outplacement counselling for redundant employees	2%	7%*
Employer provided accommodation	1%	4%*
Reimbursement of relocation costs	1%	5%*
Employer provided loans	2%	3%
Provision of pensions advice	3%	4%
Sporting or other recreational facilities on premises your organisation owns	1%	2%
Sporting or other recreational facilities on premises your organisation rents	<1%	1%
Retraining expenditure related to employees leaving your employment under a redundancy deal	1%	3%

The qualitative interviews explored whether employers offered any Benefits in Kind to their employees besides those covered in the survey. Most did not offer anything additional, however, some employers reported offering Death in Service (DiS), medical insurance, roadside assistance cover and a Save As you Earn Scheme. Although not a common finding, 1 employer also offered a home electronic scheme for white goods, TVs, and other technology for staff, through an agreed partnership with third-party providers.

In the survey, employers were asked what proportion of their workforce took up the offer of certain Benefits in Kind. The results provided in Figure 7 are the mean proportions provided by employers. Workplace parking was most commonly used by employees (69%), followed by Employee Assistance Programmes (47%) and provision of pensions advice (45%). Company cars or vehicles were taken up by around 3 in 10 employees (31%). While medium and large employers were more likely to offer some Benefits in Kind, the mean proportion of employees taking up the offer tended to be lower.

Figure 7: Mean proportion of employees taking up each Benefit in Kind

Type of Benefit in Kind (unweighted base size shown in brackets)	Mean proportion of employees who took up the benefit according to employers who offered it	Mean proportion of employees who took up the benefit, according to medium and large employers who offered it
Childcare vouchers (109)	8%	4%
Loan of a bicycle, such as through a Cycle to Work Scheme (143)	11%	2%
Workplace parking for motor vehicles, motorbikes or bicycles (262)	69%	56%
Company car or other company vehicle (230)	31%	11%
Employee Assistance Programmes (104)	47%	62%

The qualitative interviews explored how decisions around Benefits in Kind are made and who is responsible for making the decision. Interviews revealed that it tended to be the directors of a business or organisation who made decisions around which benefits to offer, such as a Finance or HR director where there was one.

The most common considerations taken around whether or not to offer a Benefit in Kind were the cost to the business, how much ‘benefit’ it would bring to the employee, and whether it would have a broad appeal across employees.

“The benefits we offer are purely budget driven and I would make those decisions [as to what benefits we offer].” (Medium employer, Other Service Activities sector)

Some employers considered whether or not the Benefit in Kind would be taxable, and whether it would impact recruitment and retention. Some employers said that sometimes their employees will negotiate the Benefits in Kind offered to them.

“We are noticing more often that employees will use it as a bargaining tool to remain, you know, particularly with cars and private health insurance.” (Large employer, Financial and Insurance Activities sector)

Some employers also considered the admin burden of offering the Benefit in Kind. For example, 1 employer said that some of their employees had asked about a Cycle to Work Scheme, but due to the admin burden they decided not to offer it. Another employer said they specifically considered Benefits in Kind that they could payroll so that they would not have to do a combination of payrolling and completing a P11D.

4.2 Costs per employee and perceived market value

Employers that took part in the survey were asked to provide an estimate of how much it costs them to provide specific Benefits in Kind in a typical year. A cost per employee was then calculated by dividing the cost provided by the number of employees that employers said they provided the benefit to.

For some Benefits in Kind, the survey also asked employers to estimate how much the benefit would have cost per person, on average, in a typical year if they paid for it in the open market. Figure 8 shows the average estimated cost per employee for the employer and figure 9 shows the average estimated market value.

It is worth noting that several employers felt unable to provide this information. Responses based on fewer than 50 employers have not been included. This highlights the low prevalence and difficulty in assessing an estimated cost and market value for some of these Benefits in Kind.

Where a comparison was possible, the market value of the Benefit in Kind tended to be higher compared to the cost to the employer. For example, employers estimated that a company car or vehicle cost, on average, £9,700 per employee, compared to an estimated £11,400 in the open market.

Figure 8: Average cost per employee of each Benefit in Kind

Type of Benefit in Kind (unweighted base size shown in brackets)	Average cost per employee reported by employers
Workplace parking for motor vehicles, motorbikes or bicycles (149)	£300
Company car or other company vehicle (179)	£9,700

Figure 9: Average estimated market value of each Benefit in Kind

Type of Benefit in Kind (unweighted base size shown in brackets)	Average estimated market value reported by employers
Workplace parking for motor vehicles, motorbikes or bicycles (125)	£2,850
Company car or other company vehicle (141)	£11,400

The qualitative interviews explored how employers calculate the costs of Benefits in Kind that they offer. Employers found it difficult to provide a cost in cases where Benefits in Kind were provided as part of bigger costs to the employer, such as rent. One particular example provided was that of workplace parking where they said they would not be able to determine a separate cost for this. For others, workplace parking was a fixed annual fee or there was no cost incurred.

For the Cycle to Work Scheme, there was no upfront cost: the payment towards the loan of the bicycle was deducted from employees’ salary on a monthly basis. As 1 employer explained, the amount paid by an employee to cover the loan of the bike can vary depending on the bike obtained through the scheme. For those leasing a company vehicle, there was a set monthly cost. Meanwhile, a few said they were unable to provide a cost for electric vehicle charging, with 1 explaining that the charging point had only recently been installed.

Employers offering childcare vouchers reported that there was a monthly administration fee charged by the third-party that administers the vouchers. One employer offering welfare counselling explained that it was covered free of charge by the medical insurance, so there was not an additional cost to the business. For Employee Assistance Programmes, 1 employer said the provider is given the head count and an overall pricing is offered, whereas another employer said that it was a fixed price per head.

The qualitative interviews subsequently explored the extent to which employers estimate a value for these benefits they offer, in terms of how much they might be worth to the employee. Some explained that this is not something they do, with 1 explaining the value is dependent on the receipt they receive.

One employer offering workplace parking said their carpark rates are based around what the local council charges, but more competitive to ensure staff are not paying as much to park at work. For company cars, 1 employer said that for the vehicles there could be savings of thousands of pounds for staff, compared to purchasing privately, however, another employer felt that the market value of the company car would be quite similar although an employee could not claim back the VAT.

One employer offering employee accommodation said they use HMRC guidance and they also belong to The British Holiday & Home Parks Association which advises on the value of the benefit.

4.3 Reasons for offering Benefits in Kind

As shown in Figure 10, the most common reasons employers gave for offering Benefits in Kind to their employees was that it helps retain staff (38%) and improves staff health and wellbeing (38%). Medium and large employers (49%) were significantly more likely to report staff retention as a reason for offering Benefits in Kind, compared to 37% among small businesses.

Figure 10: Reasons for offering the Benefits in Kind explored in the survey

Reasons for offering Benefits in Kind explored in the survey	% of employers who reported this reason
Helps retain staff	38%
Improves health and wellbeing of staff	38%
Improves staff satisfaction at work	33%
Increases productivity of staff	27%
Helps attract staff	23%
Tax benefits for employees	18%
Tax benefits as an employer	11%
Required for or supports the business	9%

B20. What are the reasons for offering the Benefits in Kind that you’ve told me about to your employees? Unweighted base: employers who offered Benefits in Kind explored in survey (461)

Employee retention, the health and wellbeing of staff, staff satisfaction, and employee recruitment were the most common reasons employers gave for offering Benefits in Kind in the qualitative interviews. The hope was that by improving health and wellbeing and staff satisfaction, this would result in better attendance and less staff sickness.

“Trying to make the staff feel happier and healthier and it makes them more productive and happier to come to work.” (Large employer, Education sector)

“In the current climate, counselling comes under our employee assistance program. The take up isn’t enormous but the fact that it’s there is important, obviously because of how things are in the world at the moment. And anything that can save people money with the current cost of living crisis. The financials of these are quite minor in the whole scheme of things.” (Large employer, Other Service Activities sector)

Employers’ motivation for offering childcare was that it helps employees return to work following maternity leave. Staff that go on maternity leave tended to remain in the business or organisation, resulting in higher staff retention.

Some Benefits in Kind were offered by employers as they were required for the job, such as company cars for jobs which involved driving, as was the case for sales roles. The provision of a company car also ensured that the right sort of image was projected of the company through the type of car used. For parking at the workplace, where it was available, it made sense to offer it to employees to make it more appealing for them to come into work. One employer explained that they were in an area difficult to reach by public transport and therefore having parking was an advantage for employees and aided recruitment.

4.4 Role of Benefits in Kind in the recruitment and retention of staff

The qualitative interviews explored the role Benefits in Kind play in the recruitment and retention of staff.

Recruitment of staff

Employers explained that some Benefits in Kind were included on job adverts, such as accommodation and company cars. Other Benefits in Kind would not be individually listed on the job advert but they would be discussed during the interview process, such as workplace parking and Employee Assistance Programmes.

Employers had differing views on the impact Benefits in Kind made to the recruitment of staff in terms of attracting people to the job. Some employers did not think they played an important role in recruiting, deeming pay and working hours to have the most impact. Others felt that offering Benefits in Kind added to the overall attraction of the salary and job on offer.

“I doubt they are a decision-maker; most people move for the actual salary or the role, but hopefully it’s something that just makes the decision easier for someone.” (Medium employer, Water Supply; Sewerage, Waste Management and Remediation Services sector)

The exception to this was company cars when offered for roles which involved driving, which employers considered would have a substantial impact on recruitment.

Retention of staff

Most employers felt that Benefits in Kind played a role in the retention of staff and helped employers remain competitive in the labour market. For example, 1 employer explained that there were a lot of recruitment agencies in the local area and salaries tended to be the same, so their benefits package gave them an advantage over their competitors.

Childcare was felt to play a significant role in retaining employees when employees’ maternity leave came to an end.

“It gives staff that flexibility to carry on working because quite often people go off on leave and then they come back on a flexible working request, but then they don’t reduce their hours as much because they can afford to get help with the childcare as well, so it does influence those kinds of decisions.” (Large employer, Education sector)

As with the recruitment of employees, the provision of company cars where the job role involved driving was felt to have a positive impact on the retention of staff. For example, 1 employer said that if this was taken away they might lose employees, or they would have to pay for employees’ travel in another form or petrol to retain employees. 

4.5 Challenges of offering Benefits in Kind

The qualitative interviews also explored the challenges of offering Benefits in Kind. Positively, most employers could not think of any particular difficulties with providing the benefits they currently offer. For some employers, most Benefits in Kind were provided through a third-party and the process was felt to be well-established.

“To be honest a lot of these are supported externally so any kind of administration is dealt with by the provider and the others is through the payroll accordingly.” (Large employer, Other Service Activities sector)

Some employers said they had experienced issues administering the Cycle to Work Scheme: the administrative burden of setting it up, or in 1 case staff signing up to it but then wanting to cancel it.

Meanwhile, another employer explained that they consider the main challenge of offering Benefits in Kind to be ensuring the business stays compliant.

“[The difficulty] is to ensure that we are remaining compliant. There is obviously the employment manual from HMRC which is quite lengthy so we have to make sure that we don’t fall foul of any fines or put our employees at risk, essentially.” (Large employer, Financial and Insurance Activities sector)

4.6 Impact of COVID-19 on the Benefits in Kind offered

The research explored the impact the COVID-19 pandemic had on the Benefits in Kind offered by employers. 5% of employers offering Benefits in Kind to their employees said the increase in home working due to COVID-19 had changed the types of benefits they offer to their employees. This was asked in relation to Benefits in Kind overall, not just those specified in the survey. However, large employers were significantly more likely than employers overall to report a change to the types of Benefits in Kind offered in this context (24%).

Among those who said they had changed their offering of Benefits in Kind, some employers had started offering new benefits or increased the value of benefits offered, while others had stopped offering certain benefits. For example, 1 employer that took part in the qualitative interviews said they started to offer mental health support services. Meanwhile, another employer explained that, during COVID-19, staff were not coming into the workplace in the same way, so staff who would not normally have been allowed to use the workplace parking were able to do so. This meant that those that were attending the workplace in person did not have to look in the surrounding streets for parking, making it much more convenient for staff under the unusual circumstances.

4.7 Future intentions of offering Benefits in Kind

The qualitative interviews explored employers’ future intentions of offering the Benefits in Kind they offered at the time of interview, as well as any other Benefits in Kind they would like to offer in the future.

Most employers said they did not have any plans to change the Benefits in Kind on offer to their employees and planned to offer all current benefits indefinitely. However, some said they regularly reviewed the Benefits in Kind they offer, and that decisions can be driven by employee needs and market forces.

“We look what’s in the marketplace and change them depending on employee needs or requirements, so they’ll just be continually reviewed every year, or every couple of years, and make sure we’re up to date.” (Medium employer, Water Supply; Sewerage, Waste Management and Remediation Services sector)

For example, 1 employer said they would consider whether offering a company car is necessary for any new recruits, following the move to virtual rather than in-person meetings as a result of the pandemic.

Some employers said they would consider offering other Benefits in Kind in the future, such as a Cycle to Work Scheme, electric cars and private healthcare insurance. Whilst not a common finding, 1 employer already offering private healthcare insurance said they hoped to offer it to all staff in the future instead of it being job specific.

Some employers highlighted Benefits in Kind they would like to offer but unlikely will, due to various challenges. The administration surrounding a Cycle to Work Scheme and salary sacrifice pensions was mentioned organically (pensions were not specifically explored as part of the research). In the case of pensions, it was the admin around ensuring whatever sacrifice the employee makes does not mean their take-home pay falls below the minimum wage.

Whilst not a common finding, 1 employer said they have considered providing more company cars, but was sceptical as to whether this would be a benefit to an employee as they are highly taxed and it would impact the employee’s tax code. Meanwhile, for other Benefits in Kind, the cost to the business was the main barrier to employers offering them, such as childcare and private health insurance.

5. Payrolling Benefits in Kind

This chapter covers the different types of Benefits in Kind offered to employees through their payroll and the advantages and challenges of providing benefits in this way. ‘Payrolling’ means when you use payroll software, as opposed to a P11D form, to report to HMRC the Benefits in Kind that you provide to your employees. If you pay employee expenses and benefits through your payroll, you report them online and pay tax on them throughout the year.

5.1 Proportion of employers that payroll particular Benefits in Kind

The Benefits in Kind that were most commonly payrolled were childcare vouchers (68%) and the loan of a bicycle (61%). Figure 11 shows the proportion of employers who said they payrolled each Benefit in Kind . Large employers were more likely than employers overall to payroll childcare vouchers (94% compared to 68%), workplace parking (12% compared to 4%) and company cars (62% to 28%). Small employers were less likely than employers overall to payroll electric vehicle battery charging (82% compared to 88%).

Figure 11: Employers who said they payrolled certain Benefits in Kind

Benefits in Kind	% of employers offering a Benefit in Kind who said they payrolled it
Loan of a bicycle	61%
Employee assistance programmes	30%
Company car or vehicle	28%
Workplace parking	4%

B17: Do you payroll any of the following Benefits in Kind? Unweighted base: employers who offered Benefits in Kind explored in survey (Loan of a bicycle: 116; Employee assistance programmes: 104; Company car or vehicle: 183; Workplace parking: 206)

In the qualitative interviews, all employers that said they payrolled Benefits in Kind reported the process to be very straightforward. Employers explained that, once the system has been put in place, it does not need changing, saving a lot of the administrative burden of reporting the value of benefits. Although not a common finding, 1 employer acknowledged that they had to consistently monitor Benefits in Kind to ensure the information being provided was correct, but that the process was now much more streamlined than it used to be.

“It is easy to set up because once it’s up it will just run until the end date.” (Large employer, Administrative and Support Service Activities)

Employers who payrolled Benefits in Kind rather than complete a P11D said they did this because it was less of an administrative burden. For example, 1 employer noted that having to create a P11D to send out each month would be too much of a burden for the company. This employer also flagged that, by payrolling benefits, their annual audit becomes much easier. Another employer preferred payrolling over a P11D submission because it enables them to have control over pay-back for Employer Provided Loans.

“It means that we can manage the loan account rather than giving them the money and expecting them to pay us back after they have been paid on a monthly basis”. (Medium employer, Water Supply; Sewerage, Waste Management and Remediation Services sector)

5.2 Advantages and barriers to payrolling Benefits in Kind

Advantages of payrolling Benefits in Kind

Employers who made use of payrolling Benefits in Kind pointed to several advantages to payrolling.  Employers reported that it enables them to have a clear record of payment, making audits much simpler and smoother. For example, 1 employer was especially appreciative that payrolling allowed them to easily track back payments when administrative errors arose, meaning they could identify the root of the issue quickly.

The simplicity of the process was noted for both employees and employers. Some employers flagged that using payroll allowed them to avoid having to complete a P11D, saving them time that would have had to be spent on administrative duties. Additionally, employers do not have to deal with tax code changes when payrolling Benefits in Kind, avoiding this ‘administrative burden’ as well. Whilst for employees, they can understand how the benefits impact their pay, and therefore their taxes. This gives the additional advantage of avoiding any difficulties in the following tax year that could have occurred due to incorrect adjustments.

“For employees it’s a lot simpler rather than waiting for a year for your pay-code to change in relation to the benefits.” (Large employer, Financial and Insurance Activities)

Barriers to payrolling Benefits in Kind

Employers generally found there were no barriers to payrolling Benefits in Kind.

When employers who already payrolled at least one Benefit in Kind were asked what would encourage them to payroll more of the Benefits in Kind they offer, employers generally pointed to having access to greater information around payrolling online. This would help the employer both with having a better understanding of the benefits of payrolling whilst also enabling them to direct employees to the guidance to help them better understand the process.

“I know when we’ve looked at it online it’s a bit vague, so if they just make specific common ones a little bit easier to understand [it would be beneficial].” (Large employer, Education)

6. Supported childcare

This chapter explores more detailed information about supported childcare in the form of childcare vouchers, including the voucher provider company used, whether their organisation facilitates a refund for unused vouchers, and future intentions for offering this Benefit in Kind.

6.1 Childcare vouchers

As covered earlier in the report, just 4% of employers offered childcare vouchers to their employees. 3% of employers were currently providing them, with medium and large employers significantly more likely to provide them than employers overall at 18% and 25% respectively.

Among employers that discussed childcare vouchers during the survey, around 2 out of 10 employers (22%) said they facilitated refunds on unused vouchers, and roughly 6 out of 10 employers said they did not (59%). The remaining 19% were unsure. Large employers were more likely than average to say they do not offer refunds (82%).

As shown in Figure 12, two-thirds of employers said they expected to offer childcare vouchers indefinitely (66%), with only a quarter (23%) expecting to stop offering them within the next 5 years. Large employers were more likely than average to intend to offer them indefinitely (81% compared to 66%).

Figure 12: Length of time employers expected to offer childcare vouchers

Length of time	% of employers who expected to offer childcare vouchers for this length of time
Indefinitely	66%
4 to 5 years	2%
1 to 3 years	13%
Less than a year	8%
Don’t know	11%

D4. From today, how long do you anticipate offering the childcare voucher scheme? Unweighted base: employers who offered childcare vouchers (116).

7. Cycle to Work Schemes

This chapter explores more detailed information on those offering a Cycle to Work Scheme.

5% of employers offered the loan of a bicycle. Medium and large employers were significantly more likely to offer this Benefit in Kind at 15% and 41% respectively.

7.1 How employers offer the Cycle to Work Scheme to their employees

The majority of employers that offered a loan of a bicycle did so through a Cycle to Work Scheme (92%). All large employers (100%) offered the loan through a Cycle to Work Scheme, with small employers slightly less likely to offer one at 90%.

Of employers already offering a Cycle to Work Scheme, 36% said they would consider offering bikes without a salary sacrifice arrangement, while 50% said they would not. However, few medium and large employers would consider offering bikes without a salary sacrifice arrangement, at 9% and 6% respectively.

13% of employers offering a Cycle to Work Scheme were already offering it without a salary sacrifice arrangement.

Figure 13: Proportion of employers that offered a Cycle to Work Scheme who would consider offering bikes without a salary sacrifice arrangement

Response options for whether employers would consider offering bikes without a salary sacrifice arrangement	% of employers who offered a Cycle to Work Scheme
Already do so	13%
Would consider	36%
Would not consider	50%
Don’t know	1%

D6. Would you consider providing your employees with a bike, without a salary sacrifice arrangement? Alternative methods could include a pool cycle arrangement, in-house bicycles and access to public rented bikes. Unweighted base: employers who offered a Cycle to Work Scheme (165).

8. Company cars

This chapter provides more detailed information surrounding company cars, including employers’ reasons for offering them, use of the Employee Car Ownership Scheme and cash allowance, rules around the reimbursement of mileage, and finally employers’ intended response to the 2030 ban on new petrol and diesel cars.

8.1 Reasons for offering company cars

12% of all employers offered company vehicles as a Benefit in Kind. Of those offering company vehicles, employers on average estimated that the typical business mileage per employee to be around 29,701 miles a year.

The qualitative interviews explored the reasons for offering company cars to their employees. Most said they offered company cars due to the nature of the job requiring a lot of travel, for example driving to clients or to different sites, so it was deemed to be a necessary requirement.

“It’s more to let them do their job effectively.” (Large employer, Administrative and Support Service Activities sector)

Some employers also noted that they offered company vehicles as a way in which to attract and recruit people to their business, ensuring they remain competitive.

“It shows the right image for the company so it’s a benefit to us…” (Small employer, Professional, Scientific and Technical sector)

“As it is a competitive thing that other companies provide, we will provide that too, as we feel that it is necessary to provide it.” (Large employer, Financial and Insurance sector)

Although not a common finding, 1 employer also offered company vehicles through a family lease car scheme, with the car used for business travel as required but predominately for employees to use as a family vehicle for personal use.

The qualitative interviews also explored how decisions around the offering of company vehicles are made and who is responsible for making the decision. For most employers, the company vehicle scheme was offered to all staff where there was a requirement for a car. However, 1 employer noted that company vehicles are only offered with certain “higher ranking” job roles which would involve an increased amount of travel, for example a Director or Head of Department.

“Do they need the car to do part of their job? If so, I can justify it.” (Medium employer, Manufacturing sector)

Most employers said that employees do have flexibility when choosing their own vehicle, but most were promoting or only offering the use of ULEV or electric vehicles.

“It must be at least a ULEV or a full electric [car].” (Large employer, Administrative and Support Service Activities sector)

8.2 Employee Car Ownership Scheme

Employers that offered company cars were asked if they made these vehicles available to their employees for business use through the Employee Car Ownership Scheme (ECOS). A minority (2%) of employers said they offered company cars through this scheme.

The qualitative interviews explored the use and awareness of the Employee Car Ownership Scheme in more detail. The majority of those interviewed who offered company cars were unaware of the scheme and, of those that heard of it, only 2 offered the scheme to their employees. One employer utilised the scheme as they felt that it ensured the cars are safe and roadworthy, and it was also seen as a bonus as it ensured that business insurance was automatically included. Although the other employer offered the scheme, it was not utilised as the employee did want to be responsible for the running costs of the company car.

“It was easier to just treat it as a company car, you know we gave him the option that he could just charge the company business mileage but he declined that.” (Medium employer, Water Supply, Sewerage, Waste Management and Remediation Services sector)

Private use of company vehicles

Just under half (47%) of employers offering company vehicles allowed employees to use those vehicles for private use. As shown in Figure 9.1, it was more common to provide company cars for private use (44%) as opposed to company vans (14%).

Figure 14: Proportion of employers who offered private use of company vehicles

Response options for whether employers offered private use of company vehicles	% of employers who offered company vehicles
Offer private use of cars	44%
Offer private use of vans	14%
Vehicle not for private use	53%

F7. Do you provide cars or vehicles to your employees for private use? Unweighted base: employers who offered company vehicles (245). Totals will not add to 100% as some employers offering both cars and vans.

8.3 Company cars via cash allowance

Among employers that offered benefits in relation to travel or transport, 15% offered company vehicles through cash allowance.

Of those employers offering vehicles through cash allowance, on average they provided half (51%) of their employees with a vehicle this way. Additionally, these employers spent an average of £5,191 per employee providing vehicles to employees through cash allowance in a typical year, however, 67% reported they did not know the cost.  

8.4 Reimbursing fuel

Employee use of company car

Employers offering company cars were asked if they reimbursed employees for fuel purchased in company cars. Just over half (53%) of employers reimbursed mileage used in company cars, 47% were reimbursed at the advisory fuel rate, and 6% were reimbursed at another type of rate.

Figure 15: Proportion of employers who reimburse employees for mileage in a company vehicle

Reimbursement rate for employee mileage in a company vehicle	% of employers who offered a company vehicle
Do so at advisory fuel rate	47%
Do so at another rate	6%
Do not reimburse at all	42%
Don’t know	5%

C4a. If your employees purchase fuel for your company cars, do you reimburse mileage for business travel in those cars. Unweighted base: employers who offered a company vehicle (245).

Employee use of personal car for business travel

Employers were asked if they reimbursed mileage for an employee using their personal car for business travel. Two-fifths (41%) of employers reimbursed mileage in such cases: 37% were reimbursed at the Approved Mileage Payment Rate (AMPR) and 4% were reimbursed at another type of rate. However, most employers did not have a need to, with 30% reporting not at all and 27% were not asked the question.

Figure 16: Proportion of employers who reimburse mileage for employee use in their personal car for business

Reimbursement rate for mileage for employee use in their personal car for business	% of all employers
Do so at Approved Mileage Payment rate	37%
Do so at another rate	4%
Do not reimburse at all	30%
Don’t know	2%
Not asked this question	27%

C3. Do you reimburse mileage for an employee using their own car for business? Unweighted base: all employers (1,496).

Employee use of company vehicle for personal travel

Employers who said they offered company vehicles were asked if their employees reimbursed them for fuel purchased by the employer when used for personal travel. The majority (74%) of employers reported that their employees do not reimburse them for personal travel in a company vehicle, whilst just under a quarter (23%) of employees did, most commonly at the advisory fuel rate (21%).

Figure 17: Proportion of employees who reimburse employers for personal use of company vehicles

Rate employees reimburse employers for personal use of company vehicles	% of employers who offered a company vehicle
At advisory fuel rate	21%
Full cost of fuel	1%
At another rate	1%
Do not reimburse for private travel in company car	74%
Don’t know	3%

C4. Do your employees reimburse you when fuel purchased by the employer is used for private travel? Unweighted base: employers who offered a company vehicle (245).

8.5 Response to the 2030 ban on new petrol and diesel cars

The qualitative interviews explored employers’ intended response to the 2030 ban on new petrol and diesel cars. Most employers interviewed were already using electric or hybrid vehicles as company cars. Those who still used petrol and diesel cars had plans in place to reduce the number being used and did not plan on purchasing any new petrol or diesel vehicles.

Some employers were yet to figure out how they would respond to the ban on new petrol and diesel cars. Some planned to look into the impact it would have on their business, in particular the cost. Meanwhile, there was some scepticism as to whether the ban would be enforced.

“I don’t think for 1 minute that that will come into place because the infrastructure is just not in place! Like everything with the Government, the idea is there but it’s not realistic.” (Medium employer, Water Supply, Sewerage, Waste Management and Remediation Services sector)

“We have 1 electric car at the moment but the cost of running is a factor.” (Small employer, Professional, Scientific and Technical sector)

9. Salary sacrifice for Benefits in Kind

This chapter explores the different types of Benefits in Kind offered to employees through salary sacrifice and the advantages and challenges of providing them in this way.

9.1 Proportion of employers offering Benefits in Kind through salary sacrifice

Most employers said they did not offer Benefits in Kind through salary sacrifice (90%), with less than 1 in 10 offering benefits using this arrangement (8%). It was more prevalent among medium and large employers, with roughly a quarter offering Benefits in Kind through salary sacrifice (26%). Small employers were less likely to offer it at 5%.

Base sizes were too low for most Benefits in Kind to be able to provide information on the percentage of employees receiving specific benefits through salary sacrifice.  The only Benefit in Kind with a base size high enough was loan of a bicycle. Employers that offered loan of a bicycle through salary sacrifice provided mixed responses. The mean proportion of employees offered it was 31%.

Employers offering Benefits in Kind through salary sacrifice were asked what proportion of their employees in receipt of these benefits were basic rate, higher rate, and additional rate taxpayers. On average, these employers said that around half were basic rate taxpayers (51%), around one fifth were higher rate taxpayers (21%), and 4% were additional rate taxpayers.

Decisions around salary sacrifice

As shown in Figure 18, half of employers (50%) said they offered Benefits in Kind through salary sacrifice for all staff, including hourly paid staff. Just over two-fifths of employers (43%) offered it to all salaried staff. A minority of employers said they only offered salary sacrifice arrangements to directors, or middle managers and above. Large employers were more likely to offer Benefits in Kind through salary sacrifice to all salaried staff (60%) and less likely to offer it to all staff including those paid hourly (28%).

Figure 18: Types of employees that employers offer Benefits in Kind through salary sacrifice to

Who employers offer salary sacrifice to	% of employers who offered Benefits in Kind through salary sacrifice
All staff, including any hourly paid	50%
All salaried staff	43%
Director level only	4%
Middle managers and above	2%

E2: Who in your organisation is normally offered salary sacrifice arrangement? Base: If offers benefits through salary sacrifice. Unweighted base: employers who offered Benefits in Kind through salary sacrifice (119).

The qualitative interviews explored how decisions around offering salary sacrifice are made. Most employers suggested that those in director-level roles would meet to discuss what Benefits in Kind to offer and the best way to offer these, including through salary sacrifice. Management generally discuss the tax implications of offering salary sacrifice, with that influencing their upper limits on the value of the benefit. For example, 1 employer said they chose not to offer loans above £10,000. Similarly to Benefits in Kind playing a role in the retention of employees, as mentioned earlier in the report, employers noted that they generally look to offer salary sacrifice arrangements to as many people as possible to incentivise them to stay.

Employers reported salary sacrifice to be effective in incentivising employees to take up Benefits in Kind. Around two-thirds (67%) said it was very effective (31%) or fairly effective (36%), with only 3% of employers feeling it wasn’t effective at all. Large employers were more likely than employers on average to find it not very effective (37% compared to 24%), whilst medium employers were more likely than average to find it very effective (49% compared to 31%).

Figure 19: How effective is salary sacrifice in incentivising Benefits in Kind

Whether employers consider salary sacrifice to be an effective way of incentivising Benefits in Kind	% of employers who offered Benefits in Kind through salary sacrifice
Very effective	31%
Fairly effective	36%
Not very effective	24%
Not at all effective	3%
Don’t know	6%

E7: How effective do you think salary sacrifice is at incentivising employees to take-up Benefits in Kind? Unweighted base: employers who offered Benefits in Kind through salary sacrifice (119).

9.2 Advantages of offering Benefits in Kind through salary sacrifice

The qualitative interviews explored the advantages and challenges of offering Benefits in Kind through a salary sacrifice arrangement.

Employers noted that the key advantage of offering Benefits in Kind through salary sacrifice was reducing the cost of offering the benefit for the employer, as they can save on National Insurance contributions. Employers also noted that the salary sacrifice arrangement also enables employees to reduce the amount of tax they pay, saving them money (compared to accessing the benefit in the open market).

“It reduces the cost because they can do it through salary-sacrifice; they save tax, and as a company we save some National Insurance Contributions as well.” (Medium Employer, Water Supply; Sewerage, Waste Management and Remediation Services sector)

Additionally, employers were appreciative of being able to spread the costs over an agreed number of months – for example with the loan of a bicycle, helping them manage hidden costs that can arise in offering benefits. Whilst not a common finding, 1 employer noted that salary sacrifice helps to avoid them chasing employees for the cost of benefits as it automatically comes out of employee pay cheques.

Some employers mentioned the impact on employee recruitment and retention when discussing the advantages of offering Benefits in Kind through salary sacrifice.

“It’s good for employee retention because they are committing to a car for a 3 or 4 year period, which hopefully means they are more likely to stay with the company for that length of time.” (Medium Employer, Water Supply; Sewerage, Waste Management and Remediation Services sector)

9.3 Challenges of offering Benefits in Kind through salary sacrifice

As shown in Figure 20, employers generally found it easy to administer benefits through salary sacrifice, with 87% of employers feeling it was very easy (39%) or fairly easy (48%). No employers reported it to be very challenging.

As shown in Figure 21, 68% of employers found it either very easy (23%) or fairly easy (45%) to explain salary sacrifice to their employees. Large employers found it harder than average to explain it to employees, with 57% reporting it as fairly challenging compared to the 31% average.

Figure 20: How easy is it to administer Benefits in Kind through salary sacrifice

Whether employers consider it easy to administer salary sacrifice to employees	% of employers who offered Benefits in Kind through salary sacrifice
Very easy	39%
Fairly easy	48%
Fairly challenging	9%
Very challenging	0%
Don’t know	4%

E8: How easy or challenging do you find it administer employee benefits through salary sacrifice? Unweighted base: employers who offered Benefits in Kind through salary sacrifice (119).

Figure 21: How easy is it to explain salary sacrifice to employees

Whether employers consider it easy to explain salary sacrifice to employees	% of employers who offered Benefits in Kind through salary sacrifice
Very easy	23%
Fairly easy	45%
Fairly challenging	31%
Very challenging	1%
Don’t know	1%

E9: How easy or challenging do you find it to explain salary sacrifice to your employees? Unweighted base: employers who offered Benefits in Kind through salary sacrifice (119).

In the qualitative interviews, employers did not describe significant challenges of providing Benefits in Kind through salary sacrifice. However, some employers reported that salary sacrifice was a challenge in relation to employees on minimum wage. Whilst employers wanted to offer Benefits in Kind to these employees, they were unable to do so using salary sacrifice as this would reduce below the threshold according to HMRC rules.

Although not a common finding, 1 employer noted that it can be challenging to ensure employees understand the full benefits of using salary sacrifice: often employees simply see the reduction in their salary and feel as though they are not receiving their full payment for the job.

“Getting employees to understand that [what they see on payslip] is not the full benefit. They see the deduction and don’t realise that obviously it comes part and parcel with tax and NI being reduced.” (Large employer, Financial and Insurance)

Employers did not report significant administrative burdens when offering Benefits in Kind through salary sacrifice, with most noting there were none at all. Whilst not a common finding, 1 employer highlighted that there was a challenge of ensuring employees stayed above minimum wage whilst taking on the benefits. However, they agreed that once the salary sacrifice arrangement had been set up there was not an issue.

”It is quite burdensome to administrate and get set up but once it’s running it’s not too bad.”

(Medium employer, Water Supply; Sewerage, Waste Management and Remediation Services sector)

9.4 Future intentions of offering salary sacrifice for Benefits in Kind

Generally, employers already offering Benefits in Kind through salary sacrifice were planning to continue this indefinitely, with no plans to change in the future.

10. Expenses explored in the survey

This chapter explores the different kinds of expenses reimbursed to employees and the advantages and challenges of reimbursing these expenses.

10.1 Proportion of employers reimbursing expenses

Figure 22 shows the proportion of employers that said they reimbursed expenses covered in the survey. The most common expenses that were reimbursed by employers were miscellaneous items purchased by the company on the company’s request (40%), other subsistence expenses, such as accommodation when staying overnight on business (34%) and refreshments when attending meetings outside of the office (33%).

Figure 22: Proportion of employers who said they reimbursed specific expenses

Type of expenses	Proportion of employers who said they reimbursed the expense (unweighted base: 1,496)
Refreshments when attending meetings outside of the office	33%
Other subsistence expenses, such as accommodation when staying overnight on business	34%
Any other incidental employee expenses	23%
Passenger payments, for carrying passengers in their own car	5%
Professional fees, to be a member of a body which is required for the job	25%
Professional subscriptions, which are not compulsory, but relevant for the job	19%
Homeworking expenses	12%
Uniform washing	5%
Other PPE or clothing	19%
Tools	15%
Miscellaneous items purchased for the company on the company’s request (items not already covered in the expenses above)	40%

Figure 23 shows the proportion of employers that reimburse expenses fully or partially, among employers that said they reimburse each expense. During the survey, if an employer asked for clarification on what was meant by ‘partially reimbursed’, they were told “for example, you might reimburse an employee expense up to a certain amount or reimburse some types of expense but not others”.

Most employers said they fully reimbursed each expense, the most common being other items purchased by the company on the company’s request (95%), other subsistence expenses, such as accommodation when staying overnight on business (95%) and professional fees, to be a member of a body which is required for the job (93%).

Figure 23: Proportion of employers reimbursing expenses based on those who reimburse each individual expense

Type of expenses (unweighted base size shown in brackets)	Proportion of employers fully reimbursing each expense, among all employers reimbursing it	Proportion of employers partially reimbursing each expense, among all employers reimbursing it
Refreshments when attending meetings outside of the office (588)	84%	16%
Other subsistence expenses, such as accommodation when staying overnight on business (651)	95%	5%
Any other incidental employee expenses (426)	81%	19%
Passenger payments, for carrying passengers in their own car (116)	71%	29%
Professional fees, to be a member of a body which is required for the job (493)	93%	7%
Professional subscriptions, which are not compulsory, but relevant for the job (346)	87%	13%
Homeworking expenses (193)	55%	45%
Other PPE or clothing (322)	84%	16%
Tools (234)	86%	14%
Miscellaneous items purchased for the company on the company’s request (items not already covered in the expenses above) (678)	95%	5%

Similarly to the Benefits in Kind offered, medium and large employers were significantly more likely to fully reimburse the majority of the expenses explored in the survey, compared to employers overall, including:

• refreshments when attending meetings outside of the office (40% of medium and large employers compared to 28% among all employers)
• other subsistence expenses, such as accommodation when staying overnight on business (68% compared to 33%)
• any other incidental employee expenses (33% compared to 19%) *passenger payments, for carrying passengers in their own car (8% compared to 3%)
• professional fees, to be a member of a body which is required for the job (58% compared to 24%)
• professional subscriptions, which are not compulsory, but relevant for the job (35% compared to 17%)
• homeworking expenses (11% compared to 7%)
• other Personal Protective Equipment (PPE) or clothing (29% compared to 16%)
• tools (18% compared to 13%)
• other items purchased for the company on the company’s request (60% compared to 38%)

During the qualitative interviews, employers were asked why they chose to fully reimburse some expenses and only partially reimburse others. Of those employers who said they partially reimbursed some expenses, most said this was in relation to accommodation and business travel costs, for example employees had a limit on how much they could spend on a hotel or on their meals/refreshments. Any employees who spent above the upper limit would need to cover the excess themselves. However, all noted that these limits were reasonable and in line with standard prices for a hotel or meals.

Employers also discussed why they chose not to reimburse some expenses at all, with most responding that the expenses included in the survey were simply not relevant to their line of work. Some of the most commonly mentioned expenses that were not relevant included professional subscriptions, PPE, uniform washing and tools.

Whilst not a common finding, 1 employer explained that, although they encourage employees to become part of professional bodies relevant to their jobs, they choose not to reimburse this as an expense as they view it as a benefit to the employee, and not the company. Additionally, another employer stated that they do not offer incidental overnight expenses as they feared that employees would abuse this expense.

Decisions around the reimbursement of expenses

The qualitative interviews explored how decisions around the reimbursement of expenses are made and who is responsible for making these decisions. As with Benefits in Kind, employers reported that decisions are typically made by those in director-level roles.

When it came to making decisions on whether or not to reimburse an expense, most employers reported that it is fundamentally down to whether or not the expense was necessary, and whether or not it was related to the company. Some employers noted that certain expenses had to be pre-approved with a line-manager or director before being paid for, for example accommodation and travel costs.

10.2 Reasons for and challenges to the reimbursement of expenses

Reasons for reimbursing expenses

In the qualitative interviews, most employers stated that the main reason they reimburse their employees expenses was because it was simply the “right thing to do” if the cost was incurred due to the nature of the business, for example travelling to a client.

“It enables them (employees) to do the job that they are there to do basically.” (Medium employer, Water Supply, Sewerage, Waste Management and Remediation Services sector)

“If they are out all day, it’s just so that they are not disadvantaged on behalf of the company.” (Large employer, Education sector)

In particular, employers who offered the reimbursement of professional fees explained that this was to ensure that employees are up to date with accreditation, with 1 employer noting that having up to date professional subscriptions and accreditations can be an advantage when approaching potential clients.

“We want to make sure that all of our staff are appropriately keeping up to date with their qualifications and that’s not an issue - we fully expect that cost.” (Small employer, Professional, Scientific and Technical Activities sector)

Employers generally felt that the reimbursement of expenses had less of an impact on the recruitment or retention of staff than offering Benefits in Kind did. Although 1 employer felt that without the reimbursement of expenses they would not be able to recruit staff.

Aside from this, as shown in Figure 24, the most common reasons employers gave for reimbursing employee expenses, from a list read out to them in the survey, were that it improves staff satisfaction at work (45%) and that it helps retain staff (42%). Medium and large employers (13%) were significantly less likely to report tax benefits for the employees as a reason for reimbursing expenses, compared to 18% of small employers. Additionally, small employers (36%) were significantly more likely to report improved health and wellbeing of staff as a reason for reimbursing expenses, compared to a quarter (25%) of large employers.

Figure 24: Reasons for the reimbursement of expenses explored in the survey

Reasons for the reimbursement of expenses explored in the survey	% of employers who reimbursed expenses
Helps retain staff	42%
Improves health and wellbeing of staff	35%
Improves staff satisfaction at work	45%
Increases productivity of staff	33%
Helps attract staff	25%
Tax benefits for employees	18%
Tax benefits as an employer	17%

C7. What are the reasons for reimbursing expenses for your employees? Unweighted base: employers who reimbursed expenses (953). For brevity, reasons employers reimbursed expenses have not been included here where 15% or less employers selected that reason.

Challenges of reimbursing expenses

During the qualitative interviews, employers were also asked if they faced any challenges when it came to the reimbursement of expenses. Most employers could not think of any specific challenges or difficulties faced with reimbursing expenses to employees.

Most small employers felt that the lack of difficulty with reimbursing expenses was due to the small number of expenses they had to deal with.

“We do so little therefore it’s quite simple.” (Small employer, Accommodation and Food Services sector)

Some employers found the verification process to be an administrative burden. For example when employees forgot to attach receipts or the difficulty in calculating mileage use per employee when a vehicle is shared.

Additionally, 1 employer felt that the reimbursement process in general was complex due the large amounts of paperwork it involved including VAT receipts and sometimes the calculation of VAT as some receipts do not show this. They reported feeling that they had to keep a ”strict eye” on this process in order to prevent employees abusing the system, especially as on their system there are no parameters set so employees can input any figures initially.

“The system currently doesn’t allow us to input parameters, so people type in their figures and then we have to over-type it, so we do provide paperwork so that employees know that they can’t just type in what they feel is the amount.” (Large employer, Financial and Insurance Activities sector)

10.3 Impact of COVID-19 on the reimbursement of expenses

The research explored the impact the COVID-19 pandemic had on the reimbursement of expenses offered by employers. In the survey, only 2% of employers that reimbursed expenses said that the increase in home working due to COVID-19 had changed the rules around the reimbursement of expenses to their employees. Large employers were significantly more likely to report that they did not know if the rules around the reimbursement of expenses had changed (8% compared to 1% on average).

During the qualitative interviews, most employers reported that the COVID-19 pandemic had reduced the need for the reimbursement of expenses. For example, employees incurred fewer travel expenses, including mileage and accommodation, as business travel in general substantially reduced. Although not a common finding, 1 employer noted that there had been very little use of their expenses procedure during the pandemic due to a number of the employees having been furloughed.

“Probably very little expenses at all… Everyone was furloughed apart from 3 employees.” (Small employer, Professional, Scientific and Technical sector)

Future intentions for reimbursing expenses

The qualitative interviews explored employers’ future intentions for reimbursing expenses, and whether or not they would like to reimburse other expenses in the future.

Most employers planned to continue reimbursing the same expenses as reported at the time of the interview, and had no future intentions of reimbursing any other types of expenses. Some employers noted that the value and amounts paid in expenses would remain under constant review to cover general cost increases and inflation. For example, 1 employer reported that they recently reimbursed an extra 10p per mile for fuel purchased by an employee during the period when fuel prices had increased.

Some employers also acknowledged that they were currently reviewing their expense limits due to the cost of living crisis at the time of the interview.

“The only thing we’ve considered recently is those thresholds that we put in place and with the cost-of-living increases they might need to be looked at and increased, but we’re still thinking about that at the moment and we’re going to review the last couple of months and have a look to see if the costs are going up and if we need to raise those limits.” (Large employer, Education sector)

11. Conclusions

Overall, employers were more than twice as likely to reimburse expenses as they were to offer any Benefit in Kind. Medium and large employers were significantly more likely than small employers to offer both Benefits in Kind and expenses. Where Benefits in Kind were offered, they also offered a higher number on average. The most common Benefits in Kind explored in the survey that were offered by employers were workplace parking, company cars or vehicles and the loan of a bicycle.

The most common reasons employers gave for offering Benefits in Kind to their employees was that it helps retain staff and improves staff health and wellbeing. The Benefits in Kind felt to have most impact on recruitment and retention were cars and childcare.

Positively, most employers could not think of any particular challenges or difficulties with providing the benefits they currently offer or with reimbursing expenses to employees. Most did not have any plans to change the benefits on offer to their employees and planned to continue reimbursing the same expenses indefinitely.

The Benefits in Kind that were most commonly payrolled were childcare vouchers and the loan of a bicycle. Employers found the process of payrolling Benefits in Kind to be very straightforward.

It was uncommon for employers to offer Benefits in Kind through a salary sacrifice arrangement, although medium and large employers were more likely. Employees receiving benefits through salary sacrifice were most commonly basic rate taxpayers and salary sacrifice arrangements were typically offered to all staff. Employers found salary sacrifice to be effective in incentivising employees to take up Benefits in Kind and there were few challenges highlighted about providing benefits through salary sacrifice. Generally, employers were planning to offer salary sacrifice for Benefits in Kind indefinitely, with no plans to change in the future.

The research found that the COVID-19 pandemic had little impact on employers’ offering of Benefits in Kind and expenses. It was rare for employers to have changed the types of benefits or expenses offered to employees as a result of the increase in home working due to COVID-19.

12. Technical appendix

This appendix provides more detail on research approach including information on cognitive interviewing, pilot fieldwork, sampling, weighting, data analysis and sample outcomes.

12.1 Research design and gathering data

The quantitative research involved 3 stages. First, a cognitive testing phase consisting of 20 interviews were completed between 19 and 26 July 2022. The main aims of this phase were to check whether the proposed questions were clear, explore employers’ understanding of particular questions and how they interpreted them, and whether there was anything that could be done to improve the survey questionnaire.

Second, a pilot telephone survey of 103 interviews was conducted between 17 August and 1 September 2022. The pilot survey revealed the initial estimate of the incidence of employers offering Benefits in Kind and reimbursing expenses, employers’ knowledge surrounding the valuation of specific benefits and highlighted employer uncertainty on whether or not they offered Benefits in Kind.

The mainstage telephone survey consisting of 1,496 interviews with employers of varied business size and industry sector was conducted between 7 November 2022 and 20 January 2023. Interviews lasted around 25 minutes on average.

12.2 Sampling

HMRC initially supplied details of 22,300 organisations, at enterprise level. The sample was supplied with a limited range and volume of contact details. In order to enhance the sample, address lookups and tele-matching for business contact details were both carried out.

A stratified random sample was drawn for each of the cognitive interviews and pilot interviews, to provide a broad spread of sizes and sectors of businesses, in order to test the script.

Between piloting and mainstage, a further group of the sample was excluded. This was a group of businesses assessed (from pilot results) as likely to be one person businesses (size = 1 employee and legally registered as a company). This group had a very low rate of successful completion, and it was not economic to include them in mainstage fieldwork. This resulted in the removal of 1,955 records from the sample.

For the mainstage, due to the poorer than expected availability of contact details, and the larger than expected number of one person businesses in the sample, all the remaining sample (12,651 records) were mailed and included in fieldwork.

All businesses selected were sent a mailing by post, to give them the opportunity to opt out. Post was chosen because email address was not available on the sample.

12.3 Cognitive testing

As set out in the research design section above, fieldwork was split into 3 stages, the first of which was the cognitive testing phase. Ahead of launching pilot fieldwork, IFF carried out cognitive interviews with 20 employers. The main aims of the cognitive testing were to check whether the proposed questions are clear, explore their understanding of particular questions and how they interpreted them, and whether there is anything that could be done to improve the survey questionnaire.

In each interview, the interviewer initially went through the survey with the participant as they would if they had contacted them via telephone to invite them to take part in the research. Participants were subsequently asked about how they found the survey, whether any of the questions confused them, and how they arrived at some of their answers.

Following this, some changes were made to the survey questions ahead of the pilot research phase, in order to maximise the value of the survey.

12.4 Pilot fieldwork

A pilot telephone survey of 103 interviews was conducted between 17 August and 1 September 2022. Interviews were conducted with a mix of business size and sector. The pilot survey revealed the initial estimate of the incidence of employers offering Benefits in Kind, employers’ knowledge surrounding the valuation of specific benefits and highlighted employer uncertainty on whether or not they offered Benefits in Kind. Following this, some changes were made to the survey questions ahead of the mainstage research phase.

12.5 Mainstage fieldwork

As set out in the research design section above, fieldwork was split into 3 stages, the final of which was the mainstage research.

Overall, 1,496 interviews were completed, of which 1,089 were full interviews with respondents using Benefits in Kind or expenses and 427 ‘short’ interviews were also completed with respondents who did not use any Benefits in Kind, and were therefore not eligible for a full interview. A ‘short’ interview is defined by a screen out at question A7 (see questionnaire in Chapter 13), where they confirm they do not offer any Benefits in Kind. In the full interviews, up to 5 Benefits in Kind were specifically asked about. The 5 Benefits in Kind asked about for each respondent were selected automatically to maximise response for those Benefits in Kind that had been selected less.

Proportion offering Benefits and Kind and reimbursing expenses

Employers that took part in the survey were initially asked if they offered any type of Benefit in Kind or expenses to their employees; this can be seen in the chart in Figure 25. When employers were initially asked if they offered any Benefits in Kind or expenses, 29% reported they offered expenses only, 13% reported offering both, 11% reported offering Benefits in Kind only and half (50%) reported they did not offer either. Less than 1% reported that they did not know if they offered Benefits in Kind or expenses.

Figure 25: Initial self-reported prevalence of employers’ offering Benefits in Kind and expenses

Type of Benefits in Kind and expenses employers initially said they offered	% of employers who took part in a short interview
Benefits in Kind only	7%
Benefits in Kind and expenses	13%
Expenses only	29%
Neither	50%

A6. Other than that, does your organisation offer any form of Benefits in Kind or reimburse expenses to its employees? Unweighted base: all employers who took part in a short interview (1,496).

However, as the survey fieldwork progressed it became clear there was uncertainty among many employers on whether or not they offered Benefits in Kind or expenses and this led to the questionnaire evolving. Initially, the questionnaire asked employers twice if the company offered Benefits in Kind or expenses, with the second time offering more explanation. After employers were asked a second time with more information on what constitutes Benefits in Kind and expenses, the proportion reporting offering them increased. As shown in Figure 26, in the pie chart on the right-hand side, after extrapolation, 35% of employers reported offering expenses, 16% offered both Benefits in Kind and expenses, 11% offered Benefits in Kind only and just over a third (37%) reported they did not offer either.

Figure 26: Estimated prevalence after more explanation of employers’ offering Benefits in Kind and expenses

Type of Benefits in Kind and expenses employers said they offered after more explanation	% of employers who took part in a short interview
Benefits in Kind only	11%
Benefits in Kind and expenses	16%
Expenses only	35%
Neither	37%

A6 and A6a. Are you sure you don’t offer any benefits or expenses? Benefits would include parking spaces for staff, company cars, any cycle to work scheme, and vouchers and allowances of various kinds. Expenses would include paying for uniforms or tools, or for travel or refreshments when employees go to meetings. Unweighted base: all employers who took part in a short interview (1,496).

Upon further developments to the questionnaire during fieldwork, the questionnaire reverted to asking employers once if they offered any Benefits in Kind or expenses, but then moved onto ask them about specific benefits and expenses even if employers initially reported not offering them. When employers were asked about specific Benefits in Kind and expenses, more employers acknowledged offering them to employees. These estimations were produced from:

• the proportion offering at least one of 21 specific non-taxable benefits listed in the survey
• the proportion offering at least one of 13 specific types of expense payments listed in the survey, excluding ‘items purchased for the company on request of the company’ as it was not viewed as an expense by most employers

12.6 Weighting

Weighting was carried out in order to produce a dataset representative of the sampling frame, allowing inferences to be drawn regarding the population of businesses as a whole.

To summarise, when a weighted dataset is analysed, each case is taken (by the analysis software) to represent more or fewer than 1 respondent, depending on the response rate from that type of respondent. This compensates for variations in response rates across the population, allowing for more accurate estimates to be made relating to the population as a whole.

The dataset produced from the survey would not be representative of the sampling frame population without this step, for several reasons:

• oversampling of large businesses, necessary in order to produce separate results
• variable response rates
• variable representation in the survey sample, due to (for example) varying propensity to provide valid contact details to HMRC

Weighting was carried out using a profile of businesses provided by HMRC, sourced from databases of taxpaying businesses.

While weighting is necessary to produce representative results from any sampled survey, weighting has a negative effect on the statistical error margin produced by a dataset. This is because when 1 respondent is taken to represent more than 1 business in the population (as described above), the error margin they create in the analysis increases by a similar amount.

In order to minimise this ‘design effect’, multiple weights were calculated.

Incidence weight

The first, simpler, weight is used for incidence of Benefits in Kind and expenses, where sample error is critical. This weight produces a design effect (WEFF) of 1.31, increasing the error margin on the dataset as a whole to ±2.9%, within the ±3% error margin required for Benefit in Kind incidence in this research. The error margin is calculated on a value of 50%, and a confidence interval of 95% (p<0.05).

This shows that if the weighted survey data indicated that 50.0% of businesses offered a particular Benefit in Kind, there could be 95% certainty that the true proportion of the population offering that Benefit in Kind was between 47.1% and 52.9%. This error margin becomes narrower where percentages reported are closer to the ends of the distribution, for example, if 10% of businesses offered a Benefit in Kind, then the error margin on that would be smaller.

Figure 27: Weighting profile: incidence weight

Size of business (number of employees)	Survey data	Survey data profile	Weighting targets	Population profile
Small (1 to 49 employees)	1,080	73%	1,453	97%
Medium (50 to 249 employees)	250	17%	34	2%
Large (250 or more employees)	163	11%	9	1%
Total	1,496	100%	1,496	100%

Analysis weight

The second weight is used for other analysis, where sectoral bias is important to take into account. Because the largest factor in the weighting is the business size, the additional impact of this more complex design on the design effect is not large. The maximum error margin associated with the use of this weight is ±3.2%.

Figure 28: Mainstage survey data profile

SIC Sector	Small (1 to 49 employees)	Medium (50 to 249 employees)	Large (250 or more employees)	Total
A - Agriculture, Forestry and Fishing	36 (2.4%)	5 (0.3%)	3 (0.2%)	44
B - Mining and Quarrying	1 (0.1%)	2 (0.1%)	2 (0.1%)	5
C - Manufacturing	64 (4.3%)	26 (1.7%)	11 (0.7%)	101
D - Electricity, Gas, Steam and Air Conditioning Supply	0 (0.0%)	1 (0.1%)	0 (0.0%)	1
E - Water Supply; Sewage, Waste Management and Remediation Activities	12 (0.8%)	4 (0.3%)	1 (0.1%)	17
F - Construction	44 (2.9%)	12 (0.8%)	1 (0.1%)	57
G - Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles	279 (18.6%)	20 (1.3%)	11 (0.7%)	310
H - Transport and Storage	33 (2.2%)	11 (0.7%)	11 (0.7%)	55
I - Accommodation and Food Service Activities	73 (4.9%)	16 (1.1%)	14 (0.9%)	103
J - Information and Communication	45 (3.0%)	7 (0.5%)	3 (0.2%)	55
K - Financial and Insurance Activities	9 (0.6%)	11 (0.7%)	2 (0.1%)	22
L - Real Estate Activities	51 (3.4%)	15 (1.0%)	2 (0.1%)	68
M - Professional, Scientific and Technical Activities	156 (10.4%)	17 (1.1%)	11 (0.7%)	184
N - Administrative and Support Service Activities	100 (6.7%)	33 (2.2%)	30 (2.0%)	163
O - Public Administration and Defence; Compulsory Social Security	19 (1.3%)	4 (0.3%)	7 (0.5%)	30
P - Education	9 (0.6%)	27 (1.8%)	29 (1.9%)	65
Q - Human Health and Social Work Activities	73 (4.9%)	17 (1.1%)	15 (1.0%)	105
R - Arts, Entertainment and Recreation	11 (0.7%)	10 (0.7%)	3 (0.2%)	24
S - Other Service Activities	68 (4.5%)	12 (0.8%)	7 (0.5%)	87
Total	1,083	250	163	1,496

Figure 29: Mainstage survey population profile and weighting targets

SIC Sector	Small (1 to 49 employees)	Medium (50 to 249 employees)	Large (250 or more employees)	Total
A - Agriculture, Forestry and Fishing	28 (1.9%)	0 (0.0%)	0 (0.0%)	28
B - Mining and Quarrying	1 (0.0%)	0 (0.0%)	0 (0.0%)	1
C – Manufacturing	74 (5.0%)	4 (0.3%)	1 (0.1%)	79
D - Electricity, Gas, Steam and Air Conditioning Supply	0 (0.0%)	0 (0.0%)	0 (0.0%)	0
E - Water Supply; Sewage, Waste Management and Remediation Activities	4 (0.3%)	0 (0.0%)	0 (0.0%)	5
F – Construction	102 (6.8%)	0 (0.0%)	0 (0.0%)	102
G - Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles	220 (14.7%)	4 (0.3%)	1 (0.1%)	225
H - Transport and Storage	71 (4.8%)	1 (0.1%)	0 (0.0%)	73
I - Accommodation and Food Service Activities	123 (8.2%)	3 (0.2%)	0 (0.0%)	126
J - Information and Communication	120 (8.1%)	2 (0.1%)	0 (0.0%)	123
K - Financial and Insurance Activities	28 (1.9%)	1 (0.1%)	1 (0.0%)	30
L - Real Estate Activities	43 (2.9%)	0 (0.0%)	0 (0.0%)	44
M - Professional, Scientific and Technical Activities	259 (17.3%)	3 (0.2%)	1 (0.0%)	263
N - Administrative and Support Service Activities	146 (9.7%)	3 (0.2%)	1 (0.1%)	150
O - Public Administration and Defence; Compulsory Social Security	6 (0.4%)	0 (0.0%)	0 (0.0%)	7
P – Education	30 (2.0%)	4 (0.2%)	1 (0.1%)	35
Q - Human Health and Social Work Activities	82 (5.5%)	6 (0.4%)	1 (0.1%)	88
R - Arts, Entertainment and Recreation	35 (2.4%)	1 (0.1%)	0 (0.0%)	37
S - Other Service Activities	79 (5.3%)	1 (0.0%)	0 (0.0%)	80
Total	1,453	34	9	1,496

Benefit in Kind weight modifiers

Some sections in the survey were modular, with only a proportion of those eligible asked about, for example, the costs associated with providing specific Benefits in Kind. This was done to reduce the burden of the survey on larger companies, who might have a large number of Benefits in Kind to answer regarding.

This was compensated for by the use of modified weight variables to be used only for modular questions, which increase the weight variable at those questions by the inverse of the proportion of those eligible asked the question. This modifier was stratified by company size. For example, 81% of those medium sized businesses offering workplace parking were asked follow-up questions about this parking. Their weight received a corresponding modifier of +23% (1 / 0.81) to provide figures with a total representing the number eligible to be asked the question, rather than the number who were asked that question.

12.7 Qualitative research

Figures 30 and 31 show the profile of employers that took part in the qualitative follow-up interviews by size and sector.

Figure 30: Profile of employers that took part in the follow-up qualitative interviews by business size

Size of business (number of employees)	Number of interviews
Small (1 to 49 employees)	13
Medium (50 to 249 employees)	10
Large (250 or more employees)	7
Total	30

Figure 31: Profile of employers that took part in the follow-up qualitative interviews by business sector

Business sector	Number of interviews
Manufacturing	3
Water Sewage	2
Wholesale Retail	5
Transportation and Storage	1
Accommodation and Food Services Activities	1
Financial and Insurance Activities	1
Real Estate Activities	1
Professional, Scientific and Technical Activities	9
Administrative and Support Service Activities	3
Public Admin Defence	2
Education	1
Other Service Activities	1
Total	30