Benefits in kind & self-assessment 30 May 2022 at 5:26PM in Cutting tax 2 replies 141 views

ARainyDay

Evening all
Am helping my partner who was self-employed and also a PAYE employee complete their tax return.

With their PAYE job they receive a £10.70 benefit in kind for Healthshield medical. This is included monthly in the payment section of their payslip. It's not included in the "Salary" line but is listed as "Healthshild" on a separate line, albeit within the same payment section. Looking at their P60 this £10.70 monthly benefit is classed as income and included in the their total pay figure. So far so good, as I understand employers can "payroll" benefits in kind. However, I do not think my partner has been taxed for this benefit. In the "Deductions" section of their payslip there is a line titled "Benefits In Kind" and the full monthly value (£10.70) of the benefit is listed. So it's listed as a deduction, but not as a PAYE tax deduction. Their tax code wasn't amended to reflect this benefit in kind (as I know this is sometimes the case), and there's nothing on the P60 which indicates that the benefit deductions have been made. I am worried therefore that when it comes to completing their self-assessment tax return they will be taxed more because of this benefit, because from looking at their paslips they've only been taxed on their "Salary" and not the £10.70. Can anyone help with this?

unholyangel

His employer can help. 

We'd be guessing on whether the full amount has been made good, or it's payrolled, or there's a reportable benefit in kind. 

Get him to speak to his employer and they should be able to give him a sure answer. 

zagfles

Why do you think your partner is not being taxed on the benefit, what you've described above implies it is being taxed, it's how payrolled benefits work. The benefit value is added to taxable pay, but deducted from after tax pay. Which appears to be exactly what you're describing above.

In this way, the benefit is taxed, as it's added to taxable income and then deducted after tax (as it's not pay, it's a benefit). Compare the "taxable pay to date" on the payslip for 2 consecutive months, it should increase by salary etc plus the benefit.

The tax code doesn't need adjusting with payrolled benefits. The final P60 should include the benefit, and usually no P11d is issued.