Knowledge Bank > Business planning > Taxation of benefits in kind
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01: Introduction

Fringe benefits are often used as ways to provide employees and company owners directors with tax efficient ways of receiving remuneration. Some fringe benefits are worthwhile in that they are more lightly taxed than their equivalent value in salary, while some are relatively heavily taxed and should generally be avoided.

The rules taxing fringe benefits or perks have changed over the years. As a result, some perks that were tax efficient in the past are no longer attractive, while others have become worth investigating. No doubt there will be changes in the future, so it is always important to check the up to date position.

Many fringe benefits are subject to tax and therefore also employers’ class 1A national insurance contributions (NICs) at the rate of 13.8%. There are no employee NICs on benefits in kind and defined benefit scheme contracting out rebates do not apply to class 1A NICs.Last Updated 

Tax rules are subject to change. The FCA does not regulate tax advice.