Glossary
Fringe benefits
Fringe benefits are non-wage compensation given on top of an employee's salary, ranging from private health insurance and company cars to gym memberships, some of which are taxable and some are not.
Reviewed by Teamed's in-house employment-law team·Last updated 24 June 2026
Also known as: benefits in kind, non-wage benefits, employee perks, BIK
What is Fringe benefits?
Fringe benefits are any compensation an employer gives beyond base pay. That can be a physical item like a company car, a service like private health insurance, or something intangible like extra annual leave. The term covers both statutory benefits (the minimum the law requires, such as pension contributions) and discretionary ones an employer adds voluntarily to attract or retain talent. In the UK, HMRC calls these "benefits in kind." Whether a fringe benefit is taxable depends on what it is and the rules in each country. Some, like employer-paid childcare or transit subsidies up to a set limit, are excluded from tax. Others, like bonuses, company car allowances for personal use, or gym memberships, are typically counted as taxable income for the employee. Employers usually also owe social contributions on taxable benefits. When you hire someone through a global employment platform, fringe benefits need to be set up in line with local law and payroll reporting rules in each country.
Are fringe benefits taxable?
It depends on what the benefit is and where the employee works. Many benefits are taxable income for the employee. Others, such as employer contributions to a pension or approved transit subsidies within set limits, are excluded from tax under specific rules. The rules differ by country.
What counts as a fringe benefit?
Common examples include private health insurance, company cars used for personal trips, life assurance, gym memberships, meal vouchers, staff discounts, employee share schemes, and employer-paid education. Statutory benefits like pension contributions or paid leave are also fringe benefits in the broad sense.
Who pays the tax on fringe benefits?
Usually both parties share the cost. The employee pays income tax on the taxable value of the benefit. The employer typically owes social contributions, such as Class 1A National Insurance in the UK, on that same value. Reporting obligations and deadlines vary by country.
How do fringe benefits work when hiring internationally?
Each country has its own list of taxable versus exempt benefits, different reporting deadlines, and distinct employer contribution rates. A global employment platform handles local payroll registration and benefit reporting, making sure the right amounts are withheld and filed in each place.
Key facts
- UK employer NICs on benefits in kind
- 15% of the benefit's cash equivalent value (2025/26 and 2026/27)Employers pay Class 1A National Insurance contributions on most benefits in kind at 15% of their determined value.Source: MMBA Benefits in Kind Explained· verified 2026-06-24
- US employer-provided educational assistance exclusion
- Up to $5,250 per year excluded from taxable income (2026)Under IRS Publication 15-B (2026), employer-paid educational assistance up to $5,250 annually is excluded from the employee's taxable wages.Source: IRS Publication 15-B (2026), Employer's Tax Guide to Fringe Benefits· verified 2026-06-24
- US qualified commuter benefit exclusion
- $340 per month for transit/parking (2026)Employees can exclude up to $340 per month for transit and commuter highway vehicle benefits, and a separate $340 per month for qualified parking under 2026 IRS rules.Source: IRS Publication 15-B (2026), Employer's Tax Guide to Fringe Benefits· verified 2026-06-24
Frequently asked questions
Are fringe benefits the same as statutory benefits?
Not quite. Statutory benefits are the minimum the law requires, such as pension contributions or paid leave. Fringe benefits is the broader term covering both those legal minimums and any extras an employer adds voluntarily, like private health cover or a company car.Do employees pay tax on every fringe benefit they receive?
No. Some benefits are excluded from tax up to set limits, such as pension contributions, approved childcare support, or small transit subsidies. Others, like company cars used privately or cash bonuses, are counted as taxable income. The rules depend on the country and the type of benefit.Can fringe benefits affect the true cost of employing someone?
Yes. Taxable benefits add to the employer's social contribution bill because contributions are often calculated on the total value of compensation, not just salary. When budgeting for a new hire, you need to include the cost of any benefits you plan to offer alongside the salary.What are 'de minimis' fringe benefits?
De minimis benefits are small perks whose value is so low that taxing them would be impractical to administer. Common examples include office snacks, occasional team lunches, or a birthday gift. Tax authorities in the US and UK both recognise this category, though the thresholds and specific items vary.
Related terms
Note
Glossary
Have a global hiring question?
Ask a real person, or run the numbers yourself with the free calculators.
See the full cost of hiring in your target countryLast verified 2026-06-24