Understanding Payrolling Benefits In Kind (BIK) In The UK

As part of measures to simplify and modernize the UK tax system, HMRC has announced payrolling Benefits In Kind (BIK), meaning that the tax and NIC on benefits will be collected real time through payroll rather than reported annually on P11D forms.

Benefits in Kind (BIK) are non-cash benefits provided to employees, such as company cars, private medical insurance, fuel benefits, and employer-paid personal expenses. Most BIKs are taxable and subject to Income Tax and Class-1A National Insurance Contributions (NICs).

When employers offer benefits in kind to employees, they are usually required to report these on form P11D at the end of the tax year. With payrolling benefits in kind, these benefits are instead taxed through the payroll system, just like regular salary payments so that the employees pay the correct amount of tax on them throughout the year. When an employer decides to payroll benefits, HMRC must be formally notified to avoid incorrect tax deductions