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Benefit in kind

Benefits in kind can be thought of as perks enjoyed personally, using company funds. Due to the fact that these perks effectively increase your personal income and are not taxed as part of a regular salary, each of these expenses may incur National Insurance Contributions at 13.8%

These types of benefits are reported each year to HMRC via a P11D form which simply highlights certain expenses, either paid by the company back to the employee or expenses enjoyed by the employee, during the tax year. 

National Insurance Contributions owed should be paid to HMRC by the company, not an individual employee. 

Common benefits include:

  • A company car
  • Private health insurance
  • Personal tax return fees paid for by the company
  • Interest free loans from the company to an employee - think an overdrawn Director's Loan Account (DLA)
  • Travel and hotel accommodation (HMRC require travel to be reported even though it's not taxable)

An example  company example of a Benefit in Kind and how it is taxed is when a company Director, pays for their Self Assessment tax return using their company funds - as it's a personal filing, the Director is essentially using company funds for personal benefit. This is not the Personal Tax itself.

E.G - Company Director purchases Self Assessment for £90, the NICs owed would be taxed @ 13.8% which is £12.42 which would only be paid via the P11D(b)

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