A benefit in kind is a non-cash reward that an employee may receive from their employer as part of their overall compensation – often known as perks. Many benefits in kind are completely tax free, such as a free meal or uniforms, but there are exceptions. These exceptions include but are not limited to:
Essentially, any item that’s not wholly, exclusively and necessarily used for work is most likely a benefit in kind and is taxable. You can find your benefits in kind listed on your P11D.
Your benefits in kind are taxed to ensure they aren’t offered to replace a higher salary that would impact your tax liabilities – known as a salary sacrifice.
Some benefits that are not liable to tax include:
No. They only apply to directors and employees. Your business accounts and tax return should reflect anything which you took out of the business for private or personal use.
Taxable benefits count as earnings, so they’re taxed at the same rates as your normal wages/salary.