What is Benefit in Kind?

Benefits in Kind (BIK) sometimes referred to as ‘perks’ are benefits to employees. For example, a company car or private medical care. Previously employers would typically report this on a P11D and P11D(b) annually. You can now process these voluntary through payroll to calculate the taxable benefit amount and report it to HMRC. This ensures the payroll processes the correct tax pay run, allowing real-time calculations.

What types of Benefit in Kind will you be able to process?

Only simple benefits which aren't subject to Class 1 NI and Employers Class 1A NI, like Medical and Dental, Vouchers, Mileage etc. This is anything where you can just enter a value. Payroll doesn't support more complex benefits in kind that require further calculations like cars, beneficial loans or accommodation.

Can all employers voluntarily payroll benefits in kind?

Yes, but employers must register with HMRC to payroll benefits and expenses for their employees before 6 April 2025.

For more information, read the HRMC article How to use the payrolling benefits and expenses online service.

Does Sage Payroll calculate Class 1A NICs due on Benefits in Kind?

No. It will only calculate the taxable amount due. You’ll need to handle that calculation and submission as part of their P11D(b) annual submission.