Tax - Cushion Effect of Benefit

There may be an instance where it has been agreed that the employee should receive the net pay amount that would be received without including the value of a benefit.

In order to affect this an allowance is given to cover the tax on the benefit and the tax on the allowance itself.  This leaves the Net Paid unaffected by the benefit.

For more information of this tax cushioning, follow this link and see the heading 'Allowance - Benefit'.