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HMRC internal manual

Tax Credits Technical Manual

Income: Employment income rules: Benefit in kind

Benefits in kind (BiK) are goods and services provided to an employee for free or at greatly reduced costs.  Employers are legally obliged to provide their employees details of relevant benefits in kind they have received in a tax year.

Legislation was introduced in the Finance Bill 2015 to amend ITEPA 2003 to abolish the £8,500 threshold by repealing chapter 11 of part 3 of ITEPA 2003 (exclusion of lower paid employments from parts of the benefit code).  This means that from April 16 all employees are taxed on their BiKs and expenses in the same way.

Section 10 of the SSCBA 1992 was also amended to remove the reference to excluded or lower paid employment, aligning the payment of National Insurance Contributions (NICs) by the employer with the income tax treatment.



  • Current exemptions in relation to ministers of religion have been retained (290a and 290b ITEPA 2003), and a new exemption introduced to cover BiKs for ministers of religion earning less than £8,500 which will maintain the current exemption to income tax and NICs.


  • Employees who work as carers in respect of board and lodging that is provided in the home of the person who they are caring for.  This will mean that the carer is completely exempt from income tax and the employer exempt from NIC’s on this BiK.


Note: A P9D is still relevant for tax years 2015/16 and earlier, however, a P11D will be appropriate from April 2016.


TCTM04106 summarises the benefits in kind that should be included as employment income.

TCTM04200 summarises the benefits in kind that should be excluded from employment income.


Note: With effect from 6 April 2017 the way in which many salary sacrifice and benefit in kind schemes are taxed will change, which means that some tax credit claimants will see an increase in their taxable income.

For the purposes of tax credits, where one of these schemes is in operation the taxable income figure should be used.