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HMRC internal manual

Employment Income Manual

Employment income: tax-free remuneration

There is a system that employers can adopt if they wish to make “free of tax” payments to their employees. What the employer has to do is deduct tax from the gross amount of the remuneration. The gross is the amount actually paid to the employee plus the income tax that would be payable on that gross.

Offices are not primarily involved because the question is one of interpreting an agreement between employer and employee.