There have been some recent changes to Fringe Benefit Tax (FBT) which may effect you as an employer.
A fringe benefit is a non-cash benefit that you or a third party provide to one of your employees. This could include benefits like offering employees a car, health insurance, gym membership, gift cards, staff discounts etc. You may need to pay Fringe Benefit Tax (FBT) on these benefits.
Employers pay FBT on the cost of the benefit that you’re supplying to your employees e.g. if you provide health insurance you’ll pay FBT based on the overall cost of providing this insurance to your staff.
There are four main groups of taxable fringe benefits:
- Motor vehicles available for personal use
- Free, subsidised or discounted goods and services
- Low-interest loans (other than those provided by life insurance companies)
- Employer contributions to sickness, accident or death benefit funds, specified insurance policies, and superannuation schemes not subject to employer superannuation contribution tax (ESCT).
You must register for FBT with the Inland Revenue as soon as you start providing the benefit (or benefits) to your employer. You can register online or by calling the Inland Revenue on 0800 377 772.
From April 2026 changes have been introduced to FBT that may affect how employers treat certain benefits. In some cases you now have more flexibility to choose whether to apply FBT or to treat a benefit as employment income with PAYE deducted.
It’s worth reviewing how you currently treat employee benefits to make sure you’re complying with the new rules.
Benefits where the rules have changed include:
- Gift cards
- Equalisation of FBT and PAYE
- Health and safety equipment
- Investment Boost and motor vehicles
Talk to our team if you’re unsure whether you have the right tax treatment for your employee benefits. We can review your current employee benefits and how they may be affected by the recent changes to FBT legislation and compliance.
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