Meg Saksida explores the rules on valuing benefits-in-kind for income tax purposes.
As an employee, it is normal to receive and to be taxed on the worker’s salary, wages and bonuses for the work performed in the employment. However, employers may also wish to remunerate the employee by providing benefits-in-kind.
These additional benefits are also taxable, but on what value of this benefit does the employee need to pay income tax?
What is the cash equivalent?
The basic premise for the value of the benefit for taxation purposes is the ‘cash equivalent’ of the benefit provided. How much it cost the employer to provide the benefit will determine how much the employee is taxed.
For example, if an employee receives private medical insurance, which costs the employer £1,000 a year, the taxable amount will be £1
