We sort your Self Assessment for you. £119, all in.
Fast, effortless and 100% online.
A benefit in kind is a non-cash reward that an employee may receive from their employer. These are also known as “perks” or “fringe benefits”.
A lot of benefits in kind are completely tax-free, with a few exceptions:
Basically, any item that’s not intended for use on the job (wholly, exclusively and necessarily) is most probably a benefit in kind.
You can find your benefits-in-kind on your P11D.
HMRC basically wants to ensure that you’re not using benefits in kind to replace your salary. This, of course, is because that impacts your tax liabilities.
When you earn between £100,000 and £125,000, you gradually lose your entitlement to your tax-free Personal Allowance. Within this salary bracket, you get caught in a tax trap – you end up liable to pay 60% tax on your income.
One way to avoid being taxed at such a high rate is to sacrifice cash. It’s what’s known as a salary sacrifice. This means asking your employer to make up the part of your salary in non-cash benefits, therefore avoiding going over the threshold into the higher tax bracket.
Here’s a list of a few tax-free benefits in kind: