UK — Employer National Insurance on Benefits in Kind (P11D, Class 1A NI) and Salary Sacrifice Arrangements

💡 Accountant's Note

UK employers providing benefits in kind (BiK) to employees must: (1) Report each benefit on form P11D per employee by 6 July following the tax year end (5 April). (2) Pay Class 1A NI at 13.8% on the total taxable value of all benefits — due by 19 July (postal) or 22 July (electronic). The employee pays income tax on the benefit value through a PAYE tax code adjustment (HMRC reduces the employee's personal allowance by the benefit amount, increasing their PAYE deductions through the year). COMPANY CARS: The taxable benefit = list price × CO2-based benefit-in-kind percentage (ranges from 2% for zero-emission EVs to 37% for high-emission vehicles in 2024/25). Zero-emission EVs are incentivized with a 2% BiK rate through 2024/25. PRIVATE MEDICAL INSURANCE: Full employer premium is a taxable BiK. SALARY SACRIFICE: If the employee foregoes salary in exchange for a benefit (e.g., electric car through salary sacrifice), both the employer and employee save NI on the sacrificed amount. The employee saves income tax and NI on the sacrificed salary; the employer saves 13.8% employer NI. Exempt from OpRA (Optional Remuneration Arrangements) legislation: ultra-low emission vehicles, cycle-to-work, workplace parking. Non-exempt salary sacrifice benefits (e.g., cash alternative allowances) are taxed as if cash since 2017 OpRA rules. PAYROLLING BENEFITS: Employers can now 'payroll' most benefits (voluntarily) — including the taxable value in the PAYE calculation each month rather than adjusting the tax code. Mandatory payrolling of benefits will apply from April 2026.