Benefits & Comp • 9 MIN READ
What Are Fringe Benefits and Should You Offer Them?
APR 10, 2026
Fringe benefits sit outside base salary and core benefits, but they can be the deciding factor in whether a candidate chooses you over a competitor.
Defining fringe benefits
Fringe benefits, also known as perquisites or perks, are benefits provided by an employer in addition to salary and core benefits such as pensions and health insurance. They range from the practical (company car, home-office allowance, mobile phone) to the lifestyle-oriented (gym membership, free lunches, concierge services). Most fringe benefits are subject to income tax and National Insurance as benefits in kind, so employees should understand the tax implications before attributing full value to them.
Which fringe benefits actually attract and retain talent
Employee surveys consistently identify a similar set of high-value fringe benefits: enhanced parental leave (perceived as high value even by employees who do not currently need it, because it signals care for families), flexible and remote working, learning and development budgets, and additional annual leave. Lower-value fringe benefits in most surveys are company cars (unless the role genuinely requires one), free food in the office, and branded merchandise. The key is alignment with your workforce's actual priorities, which only a survey can reveal.
Tax-efficient fringe benefits
Some fringe benefits attract specific tax reliefs that make them more cost-effective for both employer and employee. Salary sacrifice arrangements for pensions, cycle-to-work schemes, electric company cars (which attract very low benefit-in-kind rates), childcare vouchers (for legacy scheme members), and ultra-low emission company vehicles all reduce tax and National Insurance compared to equivalent cash pay. An independent benefits adviser can help you design a tax-efficient package that maximises perceived value within a given budget.
Communicating fringe benefits effectively
Fringe benefits are only effective if employees know about them and understand their value. A total compensation statement that includes the employer's cost of each benefit makes the full package tangible. Regular benefits communications, particularly during open-enrolment periods and at onboarding, ensure no benefit goes unused simply because employees were unaware of it. Benefits platforms that allow employees to browse, select, and model the cost of different options increase both awareness and appreciation.
