I'm trying to get claritifaciton and confirmation regarding benefit in kind rules (ltd company).
If the ltd company gives a member of staff a voucher to be used at say Amazon for £100 then that is a taxable benefit in kind or should that be processed through payroll? On the basis that these vouchers have £nil convertible value into cash then my feeling is that it is a benefit in kind (HMRC states that vouchers that are readily convertbile into cash should be classified as payroll).
The situation regarding other staff rewards - ipads, holidays e.t.c is more simple? These are definitely a benefit in kind?
In terms of the reporting and taxation - if it is a benefit in kind then a P11D has to be filed at the year end to cover the employers national insurance liabality. Am i correct in thinking that there is no employees national insurance liabality (these seems to good?) but there is a income tax charge on the employee - where does this income tax charge come in - I'm guessing there is some level of reporting to get it included on an employees tax code.
With respect to corporation tax - these are normal deductible expenses in the same way wages and salaries is?
My 2 key concerns that I hope someone could answer are i)employees national insurance (seems to good to be true to not have to pay any) and ii)what reporting is required to get the benefits included on a tax code.
There are a lot of "depends" when it comes to BIK. I am on a email list of payroll professional (CIOT members) and there is a discussion over whether certain expenses should be reported on a P11d or included in the salary to be taxed at source etc..... What seems to come out of it - is it depends on how it is recorded!!!!! If it's put on the payslip and taxed at source - no P11d is required. If its not then a P11d is required. You have asked quite a few questions, too many to answer in detail.
But I will say that Corporation tax charged on the taxable profit of a company and not a normal deductible expense. At the end of the year the CT due on the company profit is deducted after net profit and accrued on the balance sheet as liability. When CT is paid, the transaction is posted to the balance sheet not P/L.
Are there any benefits of giving benefits eg)ipads via BIK rather than giving cash. The only benefit I can think is that the company may get a bulk discount.
The benefits are for the employees, you pay an employee their private health, say £50 per month and the employee just pays tax on the £600 per year rather than paying £600 from their net salary. People like perks, the employee may not have spent his salary that way even if he earned £600 more and the employer knows the employee will get proper treatment if there is a need. Costs are obviously tax deductible for the employer and indeed the employer may get a better deal for everyone if there is a large take up on the benefit being offered.
if the Ipad is accounted for via the payroll there won't be any difference between the employees situation and that of him buying it personally, but if put through as a BIK then employer will claim the vat back and the net amount against profits (might have a Class 1A nic too) but employee will only have tax on the value (inc vat).
