What does Benefits in Kind mean?
Benefits in kind are the benefits an employee receives from their organisation that aren’t included in their salary. They can be either assets or services and are personally used by an employee but paid for by the company.
Some of these benefits can be taxable and non-taxable. The benefits that are taxable employers will take the tax owed through PAYE. BIK (Benefits in Kind) are taxed to ensure that employees are prevented from replacing their salary with another benefit.
However, tax owed will vary depending on the type of benefits an employee receives. In regards to the benefits that aren’t taxed, these are also known as ‘fringe benefits’ or ‘perks’.
Examples of taxable benefits
• Company car
• Private health care insurance
• Work phones that have heavy personal usage
• Non-business-related travel expenses paid for by the company
Examples of non-taxable benefits
• Fuel paid on millage used on one’s own car
• Gym membership
• Food and drinks in company staff room
• Health care/dental discounts
• Business expenses
• Travel costs (to and from work)
• Training sessions
• Phone bill on work phones
HMRC will calculate all benefits received and work out those/ if any benefits that an employee needs to pay tax on.
To learn more about Benefits in Kind visit the Government Website
How A2Z report BIK
Here at A2Z, we report benefits in kind to HMRC using a P11d form. P11d is an annual form are used to report BIK and expenses, which is then submitted yearly to HMRC. P11d forms include the benefits are non-taxable, whereas the taxable benefits are submitted on a P11d(b) form.
We suggest you discuss with your directors and employees the type of benefits you want to provide and would like to impose, as calculating the types of benefits and processing them can be difficult.
For more information on P11D/P11D(b) visit Gov.uk
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