Benefits in kind

Despite the Chancellor’s u-turn on National Insurance contributions for the self-employed, the subject of NI has clearly not been removed altogether from his agenda. Currently, some benefits in kind are exempt from NI contributions and may also permit the employee’s charge to income tax to be based on a lower figure.

However, a provision in this year’s Finance Bill aims to remove these advantages. In future, when employers offer benefits as an alternative to cash remuneration, National Insurance contributions will apply and income tax will be charged on the basis of whichever is the greater of the cash equivalent value of the benefit and the amount of pay which is foregone.

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Benefits in kind

Despite the Chancellor’s u-turn on National Insurance contributions for the self-employed, the subject of NI has clearly not been removed altogether from his agenda. Currently, some benefits in kind are exempt from NI contributions and may also permit the employee’s charge to income tax to be based on a lower figure.

However, a provision in this year’s Finance Bill aims to remove these advantages. In future, when employers offer benefits as an alternative to cash remuneration, National Insurance contributions will apply and income tax will be charged on the basis of whichever is the greater of the cash equivalent value of the benefit and the amount of pay which is foregone.