Solution Properties
Solution ID:
200427112446715
Last Modified Date:
Fri Nov 22 14:18:17 UTC 2024
Taxonomy Path:
Case category//How do I...//setting up
Author:
[email protected]
Set up your benefits in kind
Description

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 National Insurance (NI) if required.

A common use is to calculate the tax due on a taxable benefit, if you're registered with HMRC to payroll benefits.

 NOTE: Tax deducted per period can't exceed the regulatory limit of 50%. 

Cause
Resolution

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

The benefit in kind payment increases the employee's pay that's subject to tax, and if applicable 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.
     NOTE: 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 may increase 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 drop-down 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 rollback the relevant pay periods and reprocess them correctly. For help with making a correction, follow our how to use the rollback option guide.

Steps to duplicate
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