Benefits in Kind: A Full Guide

What are Benefits in Kind?

You may have heard the phrase Benefits in Kind (BiK) be referred to by its more common pseudonym: work perks.

Benefits in Kind are effectively little extras that are included in an employee’s take-home that aren’t monetary. These can be anything from a company car, a company phone, dental and/or medical insurance, childcare vouchers, gift cards, a company pension scheme, gym memberships, cycle-to-work schemes, and so on.

These are awarded to employees as an incentive to maintain team satisfaction, as well as helping your company stand out during a period of growth when you need to take on more staff. Both of which aid towards building your reputation as a staff-friendly organisation that takes care of its employees.

So if you’re looking for a way to keep your team motivated and content within their roles – but aren’t in a position to offer pay rises – Benefits in Kind could be the ideal solution.

Types of Benefits in Kind

So, we gave a few examples of standard BiKs above, but let’s dive deeper and help you find the right option/s for your organisation.

While the Benefit in Kind you opt for is entirely up to you, the monetary value of it must not exceed £50 (otherwise it needs to be reported to HMRC), be paid in cash form, or be part of each employee’s contractual agreement. It is effectively a gift and should be treated as such.

At present, there is also a £150 tax cap on BiKs (per annum and per employee) which can go towards staff entertainment (pizza parties, a games room, etc), that will not affect anyone’s tax code. All of this serves to improve company morale, reputation, and atmosphere, as well as encourages staff loyalty.

As well as the above list, great BiK ideas include:

• Team meals out.
• Post-work team drinks.
• Bottles of wine.
• Food hampers.
• Small gifts.
• Free parking.
• Living accommodation.
• WFH costs.

Should I Invest in a BiK Package?

In today’s competitive climate, it can be worth opting for a Benefits in Kind package in order to attract and retain staff. This is because offering a salary alone just isn’t enough anymore. If you’ve got a great team of reliable, hard-working players, you’re going to want to show them that you appreciate them, if nothing else but to lessen their temptation of jumping ship. 

And, although in terms of cost, a Benefit in Kind actually works out as less than a pay rise, it can often hold more value.

Choosing the Right BiK Package

We can’t tell you what the best benefits in kind package is for you because that depends entirely on your situation and staff. 

You’re well-advised to do a bit of research into what BiK option/s are the best for your team, and the best way to do this is by asking them outright what would make their work lives more enjoyable or productive.

 For example, if you live in a big city and your company doesn’t have its own designated car park, chances are your team is paying a lot of money to park elsewhere; so this could be a wise investment. Conversely, if you’re looking to be a more eco-friendly, carbon neutral business, a cycle-to-work scheme would kill two birds with one stone.

If you’ve done your research and all evidence points to a wage increase to keep bums on seats, then it can be worth vetoing a BiK package and just going for a salary increase.

Benefits in Kind & Tax

It is important to keep taxation in mind when investing in a BiK package. Depending on your company and the package you opt for, you may find your package is taxed because it may be considered of enough worth to include as part of a salary.

Bear in mind also that not all employee benefits are taxed at the same sum (and some are even exempt). It’s unfortunately not a straightforward, one-size-fits-all affair, and it can be worth looking into an online BiKs calculator or talking to a professional to get some advice.

Disclaimer: The information presented in this blog post is accurate to the best of our knowledge and based on the latest available information as of the date of posting, which is 20th June 2023. However, please note that information, laws, regulations, and circumstances can change over time. Therefore, we cannot guarantee the accuracy, completeness, or currency of the information provided. It is always recommended to verify any information independently and consult with relevant professionals or experts for specific advice or updates. The authors and publishers of this blog post shall not be held liable for any errors, omissions, or outdated information, or for any actions taken based on the information provided in this blog post. Readers are encouraged to use their discretion and exercise due diligence in evaluating the accuracy and reliability of the information before making any decisions or taking any actions based on it.