Benefits in kind are assessed on all directors and employees whose salary and benefits combined are £8,500 or more.
Remuneration by way of benefits is often attractive to employees, especially if they are paying the higher or additional rates of income tax, because the benefit may either be tax free or subject to less tax.
As tax legislation becomes ever more complicated, innovative strategic tax planning can provide a real commercial advantage and contribution to business success. Ensuring you have the right strategies in place will make a real difference to your overall tax liability.
A benefit that is not taxable is not automatically exempt from national insurance contributions (NICs).
An employer is required to complete form P11D in respect of each employee earning £8,500 or more (including benefits) and for most directors. Form P9D is required to record taxable benefits received by other employees. Benefits which are treated as pay for NIC purposes must be included on the deductions working sheet column 1A ‘earnings on which employee’s contributions payable’. (This should not include benefits liable to Class 1A NIC). Comprehensive records should be kept in relation to all benefits and expenses payments.