I'm not so sure it's wrong. What's happening is the employer ups the salary a bit. He can do that if he wants to. Makes the PAYE calculation as normal then takes payment for whatever benefit the employee has had (Hire car, hotel etc), that's OK as well.
Where it doesn't work (shameless plug) is where the IR try to tax the benefit at 10 -15x what it costs the employer such as trivial private use of an essential business car. ;-)
DG
Doesn't the BIK reduce your tax code?
--=20 Peter Saxton from London snipped-for-privacy@petersaxton.co.uk
Conventionally yes, but Dave Plowman was talking about the situation Ca 20 ? years ago.
Nevertheless, just last week my son was awarded £500 of "incentive vouchers" by his employer (Quite an impressive looking wad!) he won't pay tax on them, his employer merely grosses up their value, adds it to his salary and calculates his paye as normal and then makes a deduction for them. He doesn't file a P11d (or even a tax return) and there's no BIK.
DG
Not quite - I'd say more like 10 or so. And I'm not sure whether it has changed in broadcasting for the few staff remaining.
That means the incentive vouchers are taxable. I did the payroll for a client recently and people were given bonuses of up to 500 pounds. I grossed up their wages to allow for the 500 pounds net. The incentive vouchers were just treated as cash. The incentive vouchers are taxable. Hotel stays on business are not.=20
--=20 Peter Saxton from London snipped-for-privacy@petersaxton.co.uk
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