Currently, there are two remaining occasions when the difference between the national insurance legislation and the income tax benefit in kind rules can be used advantageously.
The first one (which was actually repealed from 6 April 2016 onwards1) was only available when benefits in kind were provided to 'lower paid employees' (ie those earning less than £8,500 p.a)2: in other words, those for whom form P11D did not need to be prepared. As the maximum income, including the taxable value of benefits, for such employees, could not exceed £8,500 per year, the scope of this opportunity was limited, but where it applied, it enabled an employer to provide a benefit in kind free of both primary and secondary contributions.
The second opportunity is where an employee is provided with a benefit in kind instead of cash. The typical employer will see effectively no difference in cost (other than in cash-flow terms, and possibly in VAT costs if the business is partially exempt) as the Class 1A charge on the benefit will often equal the
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Web page updated on 17 Mar 2025 17:24