A benefit in kind payment is a notional payment, which increases your employee's taxable pay without increasing their net pay. You can also set a BIK payment as subject to NI if required.

As an employee's taxable pay goes up, their PAYE liability also increases. This reduces their net pay. A common use of a BIK is to calculate the tax due on a taxable benefit, if you're registered with HMRC to payroll benefits.

Your software automatically includes the BIK information that ▼ HMRC requires in your full payment submission.

To process your benefits in Sage 50 Payroll, set up new pay elements for any BIKs and select the Benefit in Kind checkbox.

The benefit in kind payment increases the employee's pay that's subject to tax, and if applicable NI.

If you need to process Employer NI only on a benefit, do this through their P11D. Sage 50 Payroll can't calculate employer only NI.

Set up a new BIK

1. Click Company then click Pay Elements.
2. Click New and enter a description, for example, Medical Insurance.
3. Select the checkbox beside Benefits in Kind.
4. If the benefit is subject to NI, select the checkbox beside National Insurance.
   • If you're not sure whether your BIK is subject to NI, contact HMRC for advice
5. Click OK, then OK again.

If the BIK is subject to National Insurance, it can increase the loan contribution for employees paying a student loan. This is due to student loans calculating as a percentage of employees' NIable pay.  

Add the BIK to an employee's record

1. Select the relevant employee.
2. Click Employee then click Employee Record.
3. Click the Employment tab, then click Pay Elements.
4. From the Payment Name dropdown list, choose the required payment.
5. Click OK.
6. If required, enter the relevant hours and rate.
7. To add another payment, move to the next line then repeat Steps 4, 5 and 6.
8. Click Save then click Close.

Add the same BIK to multiple employees

1. Select the required employee.
2. Click Tasks, then Global Changes.
3. Click Payments, then click Add Payment.
4. Select the required payments.
5. Click OK, click Yes, then click OK.

BIK processed incorrectly

If you process a BIK incorrectly, you need to use the Rollback option to go back to the relevant pay periods and reprocess them correctly.