It’s an employer’s responsibility to report any Benefits in Kind, sometimes known as ‘perks’, to HMRC each year. It’s not completely straight forward as the tax system doesn’t treat all benefits in the same way. Therefore it’s important to know what you should be declaring in advance.

National Insurance is often payable on the value of Benefits in Kind and so they must be reported annually as part of your employee’s gross earnings. The report must be made via a P11D form and is the Employer’s responsibility.

Benefits in Kind are perks provided by the employer that are in addition to the employee’s salary. Each year we ask our clients to report any Benefits in Kind so that we can declare them to HMRC.

Examples of Benefits in Kind may be accommodation, use of a car or an interest free loan.

Most benefits in kind will incur an additional tax payment. The amount of tax due on your employees’ benefit in kind will depend on what rate of tax they pay. Tax for most benefits in kind will be recouped through an adjustment to your employees’ tax code (be aware that if you have a net agreement with your employee that this will impact the total tax you pay). Certain benefits also incur a Class 1a employer NIC payment which is calculated at 13.8% of the value of the benefit.

Accommodation, where the employee’s accommodation is on the same grounds but they have a separate entrance/utility bills and/or the accommodation is totally separate from your property.

Car (owned by the employer), if you provide a car for the employee that they will use for personal use (travel to and from work is considered personal use).

Travel (including travel to and from work), where any form of travel for the employee that isn’t for work purposes.

Mobile Phone, where the contract is between the employee and the supplier and you the employer pay the phone charges.

Loans, where the value exceeds £5000 per year.

Health Insurance

Gym Membership

Non-working related training

Visas

Accommodation, if you are providing your employee with accommodation within your home.

Car (owned by the employer), if you are providing your employee with a car and the employee exclusively uses the car to carry out their duties.

Car (own car), if the employee is using their own car then the family can remunerate up to 45p per mile, above that amount is considered a benefit in kind.

Mobile phones, where the contract is between you the employer and the supplier and the employee uses the phone.

Taxi rides home from work if the employee finishes between 10pm-6am and this is outside of their regular working pattern.

Loans below the value of £5000 per year

Welfare counselling (EAP)

Small gifts (below the value of £50)

Travel to and from work if your employee is disabled

Parking costs if this is used solely for work

Expenses incurred for work purposes

Training where this will support the employee’s job performance

At Stafftax we offer a fully comprehensive domestic staff payroll service. Our team will be on hand to support you throughout the employment of your household workwe. We can deal with HMRC, run the payslips and you will also have unlimited access to a team of HR advisors – find out more today.