Almost everyone one of us likes to get extra staff perks from our employers. However, not everyone knows that it falls under taxable benefits UK. Even if they are non-cash items, the HMRC still considers it as a part of your journey. So, it may increase your tax too.
Hence, this guide clearly explains what they are and how they function, assisting you to report them properly.
What Are Benefits in Kind?
Now, benefits in kind (BiKs) are products or services provided to employees on top of their payouts. At times, they are categorized as staff perks or P11D benefits.
Likewise, companies often offer such perks to support staff well being programmes. It may include vehicle allowance, medical coverage or gym memberships. Besides, if the perk is not associated with your work profile, then HMRC counts it as a taxable benefits UK.
What Counts as a Benefit in Kind?
Almost anything and everything is considered as a part of BiK! Some of the common examples include:
- Company cars
- Health insurance packages
- Interest-free loans schemes
- Gym memberships
- Work-related devices usable for personal work too
However, not all employer perks are a part of benefits in kind (BiK). For example, meals in office premises or childcare support are not a part of taxable benefit UK.
If you are unsure about your tax obligations, our online tax consultant UK can help you understand which benefits apply to you.
Do Business Expenses Fall Under Benefits in Kind Tax Return?
No! Not at all.
Even if an employee has work-related expenditures or employer reimbursements then it's not a BiK. It can include travelling to client premises or eating out during work visits. Similarly, if you're self-employed or working in construction, you'll need to understand different tax obligations. Read our guide on CIS Tax Return UK: What Subcontractors Need to Know for detailed information.
Whereas, loans for buying personal passes will be counted as BiK. However, there are other exceptions too, like trivial benefits and one-off gifts falling outside BiK.
Are Benefits in Kind Subject to Tax?
Yes! Even if the perk is not cashable, it still adds value to employee benefits.
So, to keep things on the fair flow, HMRC charges certain taxation on such perks. Moreover, employers also pay national insurance on it under the HMRC benefits in kind rules. Besides, an employee may pay taxes and sometimes not if the benefits are in cash or sellable.
Working Out the Value of a BiK
Now, the HMRC has certain strict guidelines to calculate each perk. Apparently, some items follow simple rules whereas others are more complex.
How Do You Report Benefits in Kind?
Evidently, employers are required to report employee benefits UK to HMRC.
Now, there are two ways of doing this:
1. Payrolling Benefits
At the end of a financial year, you have to submit a P11D(b) showing an employer’s national insurance due. Meanwhile, make sure that you are adding payroll calculations with the tax getting collected through PAYE.
2. P11D Reporting
Now, most P11D reporting UK reporting ends during the closure of April 2026, except for loans and accommodation.
Hence, an employee looking forward to filing a tax return, has to include their calculations through benefits in kind tax return section.
Conclusion
To sum up, BiK allows businesses to attract and support their staff well being extensively. However, they come with taxation guidelines. That is why employers must be reporting them correctly as it affects their tax benefits.
So, if you need help with taxable benefits or P11D reporting? Then, let TaxSimba guide you through every step of the way.
For a complete A-Z list of what HMRC considers as taxable benefits and exemptions, refer to HMRC's official expenses and benefits guidance.