Employee benefits in kind: who pays what

Benefits in kind split into three drawers, and the exam checks you file each benefit in the right one. Drawer one, TAXABLE: the default. A non-cash benefit's taxable value is charged to the EMPLOYEE as employment income at their own marginal rate, collected through PAYE (payrolled or reported on a P11D) — and the EMPLOYER pays Class 1A NIC at 15% on the same value. Note the asymmetry that makes this examinable: the employee generally pays NO NIC on a benefit in kind, so a benefit costs the employee less than the equivalent salary — and the employer's Class 1A is a flat rate while the employee's income tax is marginal; blur the two and you produce the standard wrong answers. Drawer two, EXEMPT by statute: meals in a staff canteen, hot drinks and water, ONE mobile phone, workplace parking, employer-supported childcare, and annual staff functions costing up to £150 per head and open to all employees. The employer paying is never, by itself, what makes something exempt — that is what makes it a benefit in the first place. Drawer three, TRIVIAL: a benefit costing £50 or less is exempt only if it clears all the conditions — not cash or a cash voucher, not a reward for work or performance, and not contractual. Cash never qualifies, however small.