Benefits in kind are non-cash benefits an employer provides in addition to salary, which usually have a cash value and may be taxable.
What are benefits in kind?
Benefits in kind are items or services provided to an employee as part of their overall reward package, rather than paid as cash. Even though the employee doesn’t receive money directly, these benefits still have a value, and in many cases, they’re treated as taxable income.
Common examples include private medical insurance or a company car. Because benefits in kind can affect tax and reporting, it’s important for employers to understand what needs to be recorded and how it should be reported through payroll or year-end processes.
Things to know
- Benefits in kind are different from salary because they’re provided as goods or services
- They may be taxable, depending on the benefit and local rules
- Some benefits can be reported through payroll, while others may be reported separately
- Clear communication helps people understand the value of their total reward package
- Correct reporting supports compliance and helps avoid tax issues
FAQs
How do benefits in kind work?
They’re non-cash benefits provided by an employer, such as services or items, offered in addition to salary.
Are benefits in kind taxable?
Often, yes. Tax treatment depends on the type of benefit and the rules in that country.
How are benefits in kind reported in the UK?
Some can be payrolled while others may be reported on a P11D. Employers should follow HMRC guidance.
Why do employers offer benefits in kind?
They can help attract and retain people and improve the overall reward package.
Where can an employee see their benefits in kind?
They may be shown on a payslip if payrolled, or reported separately (for example, on a P11D in the UK).
