What are Taxable Benefits in Kind HMRC?
There are different kinds of employee benefits, but perquisites are usually:
- Educational or governmental
- Employee incentive
- Family, retirement, or savings
- Health (e.g. private medical insurance)
- Lifestyle or recreational
- Transportation (e.g. company cars)
In fact, the government sanctions some employee benefits – which means they are mandatory. Whereas, certain other benefits from employment are either supplementary or optional. They would not be part of, or included in, your salary cheque or wages.
As a rule, it is the discretion of your employer that determines what supplementary benefits you may get. Among the most common are health insurance and pension coverage.
Tax Free Benefits in Kind UK
United Kingdom taxation does not apply to all benefits in kind. People earning less than their standard personal allowance would not get taxed on BIK. But, tax does apply to some ‘non-cash’ benefits of monetary value – no matter what your income is!
As the recipient of tax-free benefits in kind, there would be no need to enter it on a tax return. Typical examples of tax free employee benefits include:
- Certain arrangements of childcare for parents with children.
- Counselling services offered to employees who are being made redundant.
- Employer contributions paid into most approved occupational schemes or personal pensions for employees.
- Equipment and facilities provided for disabled workers to carry out their job. Check the Low Incomes Tax Reform Group for further information.
- Expenses for home removal if you must take up a new job or get relocated by your employer (up to £8,000 per move).
- Most types of in-house sports facilities.
- Non-cash gifts from someone other than your employer (e.g. invitations to sporting events up to £250 in a single tax year).
- Personal gifts (not cash) given for valid reasons unconnected with the job (e.g. retirement or wedding gift).
- Subsidies to public bus services or works buses used to transport employees to and from work.
- The provision of free or ‘cheap’ canteen meals (if provided for all employees).
- The provision of bicycles and cycling safety equipment for employees to get to and from work. It should also apply to workplace parking for bicycles and for motorcycles.
Trivial Benefits in Kind
HM Revenue and Customs (HMRC) consider some benefits in kind as ‘trivial’ – meaning they are not taxed. But, to qualify as a trivial benefit in kind, all these must apply to the perk or fringe benefit:
- It cannot be cash or a cash voucher and have a value less than £50.
- It cannot be part of your contract of employment.
- It must not be a ‘salary sacrifice’.
- It must not be a reward or a bonus for doing well or ‘excelling’ in your job.
ALSO IN THIS SECTION
Tax on Employee Company Cars
Charging an Employee’s Electric Car
You might need to pay tax for charging an electric car used by an employee. You can check if you need to pay tax on employee’s electric car and find out if they can get tax relief.
Working Out Taxable Value
Use HMRC company car fuel benefit tool to calculate tax on employees’ company cars. It uses list price and carbon dioxide emissions to work out benefit in kind tax on company cars.
PAYE Expenses and Benefits
Providing Benefits to Employees
There are various kinds of expenses and benefits for employers to report to HMRC and pay. Check how employment related expenses and benefits work for tax and national Insurance.
PAYE Settlement Agreements
Having a PAYE Settlement Agreement (PSA) in place simplifies the reporting process for employers. Find out how PSAs allow annual payments to HMRC on some types of employee expenses and benefits.
Tax on Trivial Benefits (BIK)
The treatment of tax on trivial benefits in kind varies. Check which conditions need reporting to HMRC and whether employers need to pay tax and National Insurance on them.
Providing Loans to Employees
Company and employer loans provided to employees will be subject to tax and reporting rules. Check what is exempt, what to report and pay, and how to work out the values.