Chris Thorpe outlines some important tax considerations regarding benefits-in-kind.
Whilst it is the prospect of reward that sweetens labour, a further question is what form that reward should take.
Good old pound sterling usually does the trick, but many employers will include benefits-in-kind (BIKs) in a remuneration package. Most of those BIKs are subject to income tax, in the same way as cash, but are free of employee’s National Insurance contributions (NICs) and are instead subject to employers’ NICs (i.e., Class 1A NICs). However, some are also income tax-free, offering further sweeteners to employees and company officers.
Pension contributions
Whilst not technically an ‘in-kind’ benefit, payments by an employer into an employee’s pension pot are tax-free on that employee and generally an allowable deduction for the
