Benefit in kind (BIK) refers to any non-cash benefit or perk that an employee receives from their employer in addition to their salary or wages. Examples of BIKs include company cars, private health insurance, accommodation, loans, and other fringe benefits.

In the UK, BIKs are subject to tax and National Insurance contributions (NICs), and the employer is responsible for reporting them to HM Revenue and Customs (HMRC) and deducting any tax and NICs due from the employee's salary. The amount of tax and NICs due on a BIK depends on the type of benefit and the employee's personal circumstances, such as their salary, tax code, and whether they are a higher-rate taxpayer.

To calculate the taxable value of a BIK, HMRC provides specific rules and guidance, which can vary depending on the type of benefit. For example, the taxable value of a company car is based on its list price, CO2 emissions, and fuel type, while the taxable value of accommodation is based on its annual rental value. In some cases, the employee may also be required to pay tax and NICs on any contributions they make towards the BIK.

It's important for employers and employees to understand the tax implications of BIKs, as failure to report and pay the correct amount of tax and NICs can result in penalties and interest charges from HMRC. Employers should provide employees with a P11D form at the end of the tax year, which details the value of any BIKs they have received, and employees should include this information on their tax return.