Benefit in kind

jjjj2012

Hi all,
can someone please explain "Benefit in Kind" to me?
Is this when your employer pays for a benefit for you but this in turn will increase the tax amount you pay.

For example, if A is earning £30K and is given a benefit in kind from A's employer which costs £10/month (£120 annually) would this mean insted of being taxed for £30K per year A will be taxed for £30,120, therefore paying a little more tax per year?
Or have I got this wrong?

princessdon

your benefits in kind will be detailed on your P11d.

Eg if you get a Car - the value of that car will be on your p11.

For arguments sake, lets say this is £1,100 pa.

Your tax code is then £7,000 not £8,100

In otherwords your tax coding is lowered so pay more tax, it's not that your "earnings" go up.

jjjj2012

princessdon wrote: »

0

In otherwords your tax coding is lowered so pay more tax, it's not that your "earnings" go up.

Thanks for this, when I meant A will be taxed £30,120 I didn't mean A's salary will go up to £30120, I meant will tax be applicable on £30,120 and not £30K, therefore A will pay more tax as A will be taxed on £30,120

SailorSam

http://www.adviceguide.org.uk/england/your_money/tax_index_ew/benefits_in_kind.htm

princessdon

jjjj2012 wrote: »

Thanks for this, when I meant A will be taxed £30,120 I didn't mean A's salary will go up to £30120, I meant will tax be applicable on £30,120 and not £30K, therefore A will pay more tax as A will be taxed on £30,120

Yes in a simplistic view - but the reality is they are Taxed on £30K just have a lower tax free allowance. But yes - you will pay tax (20% or 40%) if a taxable allowance.