what is benefit in kind tax

Benefit in Kind (BIK) tax is a tax on non-cash benefits or perks that an employer provides to an employee in addition to their salary. These benefits, also known as fringe benefits, can include items such as company cars, private health insurance, childcare vouchers, accommodation, interest-free loans, and other perks that have a monetary value but are not paid as cash salary. The tax is payable because these benefits are considered part of the employee's overall compensation package. The amount of BIK tax payable is generally calculated based on the cash equivalent value of the benefit or by specific rules set by the tax authorities. For example, with company cars, the taxable amount may depend on the car's list price, its CO2 emissions, and the employee's personal tax rate. Some benefits are exempt from BIK tax, such as small once-off benefits under a certain value or specific types of benefits like free meals or cycle-to-work schemes. Ultimately, BIK tax ensures that employees pay the appropriate tax on the full extent of their earnings, including non-monetary perks they receive from their employer.