I'm not familiar with the term fringe benefit tax however I believe in the UK this is what's called benefits in kind? If so then these are amounts deducted by the contractor from payments made to his people for things like company cars, fuel, medical insurance, childcare expenses and the like. Under the Schedule of Cost Components some of these things will be reimbursed to the Contractor as Defined Cost e.g. company cars fall under component 1.13(n) payments made in relation to people for a vehicle. However, for the employee a company car is a taxable benefit so tax at the rate prescribed by the government will be deducted from their wages and as such the contractor does not pay this amount and it cannot be included in Defined Cost. Neither does he allow for it in his Fee as there is no cost burden on him. The amount is deducted from the employee and paid to the government.
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