Benefit in Kind - adding to total salary or not? HMRC q?

[jinkster]

Dear all,

At work we are offered a number of benefit in kinds (Income protection in event of becoming ill and a few others etc). Do the HMRC treat this as part of salary? So say for round numbers £50,000 salary + benefit in kind (lets say £2000) = total salary as far as HMRC are concerned £52000.

.....Or is it not a straight forward as that...

Thank you.

[Somebody]

It would depend on when the BIK commenced in the tax year.

Your BIKs will normally be reported on a P11D which HMRC won't normally get until after the end of the tax year so unless your employer reports sooner (or you choose to inform HMRC now) you won't be taxed on the BIKs until next tax year via an adjustment to your PAYE tax code.

Note if your £2k BIK is for annual cover from say 1 January then the BIK will be pro-rata from 1st Jan to 5th April (end of tax year), so 96 days in this tax year and 270 days next tax year.

[FreeLitres]

jinkster said:

Dear all,

At work we are offered a number of benefit in kinds (Income protection in event of becoming ill and a few others etc). Do the HMRC treat this as part of salary? So say for round numbers £50,000 salary + benefit in kind (lets say £2000) = total salary as far as HMRC are concerned £52000.

.....Or is it not a straight forward as that...

Thank you.

In brief, yes.

The tax is based on your taxable income.
Wages + bonus + BIK - pension contribution

Work will usually provide you with a p111d form which lists the values of all your BIKs. A standard petrol/diesel company car alone could have a BIK of £10k. A £50k earner with access to such a car pays tax as a £60k earner.

[AnotherGuy]

Check the details with your employer though.

In my case, income protection provided directly by my employer is NOT considered a Benefit-In-Kind and therefore does not impact my gross taxable income. Its called Group income protection.

[supersport]

AnotherGuy said:

Check the details with your employer though.

In my case, income protection provided directly by my employer is NOT considered a Benefit-In-Kind and therefore does not impact my gross taxable income. Its called Group income protection.

This is what your P11D is for.

[jinkster]

supersport said:

AnotherGuy said:

Check the details with your employer though.

In my case, income protection provided directly by my employer is NOT considered a Benefit-In-Kind and therefore does not impact my gross taxable income. Its called Group income protection.

This is what your P11D is for.

My P11d just states 'other' and nothing is specifically mentioned.

[The Ferret]

jinkster said:

Dear all,

At work we are offered a number of benefit in kinds (Income protection in event of becoming ill and a few others etc). Do the HMRC treat this as part of salary? So say for round numbers £50,000 salary + benefit in kind (lets say £2000) = total salary as far as HMRC are concerned £52000.

.....Or is it not a straight forward as that...

Thank you.

That's how it works with benefits in kind, and since only the £50,000 goes through the payroll there is a shortfall in tax paid on the £2000 for the first year you receive the benefit. For future years HMRC try to estimate the benefit and collect it through your tax code.

However, in most cases income protection and life assurance aren't a taxable benefit.

Maybe ask your payroll dept what the numbers on your P11D relate to, especially any in an "other" box. I'd be wanting a full breakdown of that if it were me. You can then question whether it should be there in the first place.