FBT Changes in 2026: What Employers Need to Know

7 May

If you’re providing perks to your employees, it’s important to understand how fringe benefit tax (FBT) works – especially with the recent changes now in effect from April 2026.

Let’s break it down in simple terms.

What is fringe benefit tax (FBT)?

A fringe benefit is any non-cash benefit you provide to your employees.

This can include things like:

Company vehicles
Health insurance
Gym memberships
Gift cards
Staff discounts

If you provide these types of benefits, you may need to pay FBT on them.

How does FBT work?

FBT is paid by the employer, not the employee.

It’s calculated based on the cost of the benefit you provide. For example, if you pay for an employee’s health insurance, FBT is applied to the cost of that policy.

There are four main types of taxable fringe benefits:

Motor vehicles available for personal use
Free, subsidised or discounted goods and services
Low-interest loans
Employer contributions to certain insurance and superannuation schemes

If you’re providing any of these, you’ll need to register for FBT with Inland Revenue.

What’s changed from April 2026?

Recent updates to the FBT rules mean there’s now more flexibility in how some benefits are treated.

In certain cases, you can choose to:

Pay FBT, or
Treat the benefit as employment income and deduct PAYE

This change affects areas such as:

Gift cards
Health and safety equipment
Motor vehicles
The alignment between FBT and PAYE

What does this mean for your business?

While having options is helpful, it also means things can get more complicated.

You’ll need to decide which treatment works best for your situation – and make sure you’re applying the rules correctly.

If you get it wrong, it could lead to:

Compliance issues
Unexpected tax costs
Extra admin and rework

Now is a good time to review

With the new rules in place, it’s worth taking a fresh look at how you’re handling employee benefits.

Are you:

Applying the right tax treatment?
Making the most of the flexibility available?
Staying compliant with Inland Revenue requirements?

We can help

FBT isn’t always straightforward – but getting it right matters.

If you’re unsure how the new rules apply to your business, talk to our team. We’ll review your current setup and help you stay compliant while making the most of your options.

Don’t leave it to chance – get in touch with Cross Group today.

Justine Newsome