Providing employees benefits-in-kind in 2021/22

Dangling the carrot of benefits-in-kind (BIK) can help your business attract and retain the best employees, but are times changing due to COVID-19?

In years gone by, company cars have been one of the most desirable benefits-in-kind an employer could offer.

While they remain a popular choice in 2021/22, company cars have taken a backseat as more meetings take place online due to COVID-19 restrictions.

Furthermore, there’s a growing body of evidence in 2021 that suggests staff trends seem to be evolving after a year of working from home for many.

Research from Maxis GBN found 46% of employees polled had reappraised the value of benefits-in-kind when deciding to stay with or join a new employer.

A third of respondents to this study also expect businesses to offer more health benefits, rather than those associated with lifestyle.

Company vehicles

Taxable BIK on company cars have to be calculated as a percentage of the car’s list price. The car’s carbon emissions affect this percentage.

Zero-emission company cars attract a 1% taxable BIK in 2021/22, regardless of the date on which the car was registered.

The percentages for other company cars registered on or after 6 April 2020 increased by 1%, up to a maximum of 37%. Separate BIK charges apply to diesel-fuelled company cars and if for private use of a company car.

No van benefit charge applies for zero-emission company vans in 2021/22, including if you use the van for private use.

The van benefit charge for non-electric vans is £3,500. Where fuel is provided for private journeys in these vans, the fuel benefit charge is £669.

Popular benefits in 2021/22

With most employees working from home over the last year, demand for more flexible working arrangements has accelerated.

Staff also want greater wellbeing support from employers, through offering advice and support to make it easier for employees to live healthily.

Providing group medical insurance is another popular BIK for 2021/22, especially at a time when NHS waiting lists are longer than ever

Whatever benefits-in-kind you provide in your business, there are usually tax implications and reporting obligations for employers to follow.

Reporting & taxing BIK

If you offer any taxable benefits to employees during 2021/22, you need to report them to HMRC before 5 April 2022.

Most employee benefits are deducted through PAYE, as long as you have registered with HMRC as an employer before 6 April 2021.

Otherwise, you might need to submit P11D and P11D(b) forms to HMRC for any members of staff who received taxable expenses or benefits.

This helps HMRC calculate how much you need to pay in Class 1A National Insurance contributions on their behalf.

At Stapletons, our payroll service can handle any changes to the employee benefits-in-kind you provide in 2021/22. Email info@stapletonsaccountants.co.uk or call us on 01363 773191 to find out more information.