Benefits in Kind
Benefits in kind are similar to Fringe Benefits Tax in Australia, however it is the employee that bears the tax liability on the provision of such a benefit, with the employer bearing the national insurance charge.
If you are in receipt of a benefit in kind from a business you are assessed to income tax on the value of the benefit provided. There are various different types of benefits which could be and are provided to an individual/director and each of which are valued separately.
Typical benefits are:
- Living accommodation
- Vouchers
- Motorcars
- Vans
- Medical insurance
- Use of assets
- Beneficial loans
The individual receiving the benefit is subject to tax and the employer is charged to Class 1A National Insurance Contributions, which for 2009/2010 is 12.8% on the value of the benefit.
As there is no primary Class 1 contributions payable by the employee, there is a saving to the individual to substitute part of your salary or to receive benefits in kind.