FBT is not an area that changes dramatically from year to year, but several recent developments are worth noting. Together, they affect how employers account for gift cards, employment-related loans, motor vehicles and certain health and safety benefits. Here is a rundown of four developments worth checking before preparing or reviewing the next FBT return.

Gift cards: a clearer choice between FBT and PAYE

Recent legislative amendments allow employers to apply a universal treatment to all types of gift cards provided to employees on or after 16 April 2025.  Tax consequences may now be determined under either the FBT rules or the PAYE rules. 

The choice gives employers greater flexibility, although the more practical option will depend on how frequently gift cards are provided and how the employer's payroll and FBT processes are set up.

Where the FBT option is chosen, gift cards are practically treated in the same way as unclassified benefits when applying the de minimis thresholds. This means gift cards are included in the de minimis concession where the relevant employee and employer thresholds are not exceeded.

Employers that regularly use gift cards to recognise or reward staff should review their current approach to ensure the benefits are being returned under the appropriate regime and not inadvertently accounted for under both PAYE and FBT.  However, if the gift cards provided are in the nature of remuneration the PAYE rules should be applied. 

Employee loans: check the prescribed interest rate

Employers providing interest-free or low-interest loans should also keep an eye on the prescribed interest rate.

Recent amendments streamline the process for setting the prescribed rate by allowing the Commissioner to determine and publish the rate, rather than having it set through regulations. The way the taxable benefit is calculated has not fundamentally changed. Broadly, it remains the difference between the interest actually charged and the interest calculated using the prescribed rate (or, where applicable, a market rate).

What can change is the prescribed rate itself. Employers should therefore ensure they are using the rate applying to each relevant quarter when calculating the taxable value of employment-related loans.

For employers with longstanding employee loan arrangements, it is worth checking that their FBT processes will reflect the current prescribed rate.

Investment Boost: implications for FBT

From 1 April 2026, the FBT valuation rules were amended to take into account a deduction for investment boost on employer-provided motor vehicles. Broadly, the calculation in this situation ensures that the FBT payable is the same by applying a higher percentage rate if investment boost is claimed.   

Under the tax book value method, vehicles for which Investment Boost has been claimed must be maintained in a separate pool and valued using the applicable Investment Boost valuation rates. 

Under the cost price method, the Investment Boost deduction does not reduce the vehicle's original cost price for FBT purposes. In other words, claiming Investment Boost does not reduce the vehicle value on which the motor vehicle fringe benefit is calculated. 

Employers that have claimed Investment Boost for vehicles available for employees' private use should check that those vehicles have been identified correctly and that the appropriate valuation treatment has been applied.

Health and safety: the link to workplace risk matters

Inland Revenue has recently released QB 26/02: When does the fringe benefit tax exclusion for benefits relating to health or safety apply?

The guidance confirms that a benefit does not qualify simply because it promotes an employee's health or wellbeing. Instead, there must be a connection between the benefit and the employer's obligations to manage workplace health and safety risks under the Health and Safety at Work Act 2015.

That makes the workplace context important. The same benefit may qualify for one group of employees but not another, depending on the nature of their work and the risk being managed. For example, hearing tests may qualify where employees are exposed to workplace noise, but not necessarily where they work in a low-risk office environment.

Similarly, personal protective equipment, workstation assessments and certain counselling services may fall within the exclusion where they form part of the employer's response to an identified workplace health and safety risk. General wellness initiatives, such as gym memberships, are unlikely to qualify for FBT exclusion.

We've explored Inland Revenue's guidance and its practical examples in more detail in our separate article on QB 26/02.

Before the next FBT return

Taken together, these developments don't fundamentally change the FBT regime, but they provide a useful opportunity to review existing FBT policies and processes.

Employers may wish to check that gift cards are being treated under the appropriate tax regime, employment-related loans use the correct rate, motor vehicles provided have been valued correctly, and health and safety benefits satisfy the conditions for the FBT exclusion.