Benefits in kind are sometimes provided by the employer in addition to the employee's salary. They are often taxable benefits and must be reported annually as part of your PA's gross earnings.
Who pays the Tax?
Benefits in kind offer a good example of why it is important to agree a gross wage with your PA. In almost all other types of employment the employee is always responsible for paying the tax on benefits. But as many domestic employees have net pay arrangements, it means that you, the employer, are responsible for paying this tax, which can potentially be a very expensive experience. If your PA is on a gross wage, however, then the tax is deducted from her gross income at her current rate of tax.
In addition to Tax there may also be a Class 1A National Insurance charge of 12.8% of the value of the benefit to be paid - the employer always pays this charge.
Examples of taxable benefits
- Health Club Membership
- Interest Free Loan
Please note that this list is not exhaustive.
Mobile phones are not considered a taxable benefit
Use of a car
The use of a car is not considered a taxable benefit if your PA only uses it during working hours, for instance to take you to and from appointments. If however your PA is permitted to take the car home and use it as a means to get to and from work, then it must be reported as a benefit in kind.
If accommodation is provided for the PA and it has a separate front door and separate metering for gas, water and electricity, it is considered a taxable benefit and must be reported as such.
Please note that the information and examples contained on this page are to be used as guidelines only. If you have specific questions please contact Enable Payroll.