What is Benefit in Kind? UK Definition 2026/27
Quick Answer
Non-cash benefits provided by employers that are taxable, such as company cars, private healthcare, and gym memberships.
Definition of Benefit in Kind
Benefits in Kind (BiK) are non-cash perks provided by your employer that have a monetary value and are subject to income tax. Common examples include company cars, private medical insurance, interest-free loans, and accommodation.
The taxable value of each benefit is calculated according to HMRC rules, often based on the cash equivalent value. Benefits are reported on form P11D and the tax is usually collected through your tax code.
Benefit in Kind — Key Facts for 2026/27
| P11D deadline | 6 July after tax year |
| Company car tax | Based on list price × CO2 percentage |
| Medical insurance | Cost to employer is taxable |
| Beneficial loans | Taxed if over £10,000 |
How Benefit in Kind Works — Example
- 1Car list price: £35,000
- 2CO2 emissions: 120g/km = 29% BiK rate
- 3Taxable benefit: £35,000 × 29% = £10,150
- 4Tax at 40% higher rate: £10,150 × 40% = £4,060
- 5Additional monthly tax: £338
How Benefit in Kind Affects Your Tax
Benefits in Kind increase your taxable income, pushing you into higher tax brackets. Consider whether the benefit is worth the tax cost. Electric company cars have much lower BiK rates (as low as 2%).
Official HMRC Guidance on Benefit in Kind
For official guidance, refer to HMRC's documentation. Tax rules can change, so always verify current rates and thresholds on gov.uk.
HMRC: Tax on company benefitsFrequently Asked Questions about Benefit in Kind
Related Tax Terms
Accuracy Note
This information is for guidance only and is based on 2026/27 tax year rates. Tax rules are complex and your circumstances may differ. For personal advice, consult a qualified accountant or tax adviser.