Benefits in Kind or BIK are given to certain employees to make their job more comfortable. Or to enable the employee to have more time for the job. In this article, I will discuss this term in detail.
Definition of Benefits in Kind (BIK)
Benefits in Kind mean a non-cash emolument given to an employee to enable him or her to meet the job description alone with any other duties. BIK may be taxable or not taxable. It can also be defined as expenses incurred by an employer that is a benefit to the employee.
Benefits in kind are non-cash payments by employers to their employees. This means that the staff don’t receive cash in the process. This is different from cash emolument, where cash is given to the employee either on hand or through their salary account with a bank.
BIK is given to specific employees. Not all employees enjoy this form of emoluments. All employees receive cash payment in the form of net pay on the payroll of the entity. But for BIK, only employees that need it are provided with these benefits. For example, an individual who gets a job outside his or her hometown, may require a place to stay. The employer can provide housing without the employee paying for it. The free house he or she stays in is a BIK. Also top management staff are given BIK as a form of motivation.
Benefits in kind, are provided to staff, if it will help them carry out the job assigned and any other duties. Also, not all BIK are taxable. BIK are taxable, if they relate to the services rendered by the employee. Examples of BIK are accommodation, a casual driver or steward that serves the staff, and more.
As an employee, you shouldn’t accept BIK if it will not be to your benefit. Benefits in Kind is part of the employee emoluments every month. And are added to your gross income before consolidated relief allowance is deducted. Therefore, you need to compare your tax liability with BIK and that without benefits-in-kind in it. If BIK increases the tax amount you will pay, you can decide not to accept BIK. However, other factors must be considered before making a decision.
For example, your organization may offer you accommodation. Before accepting it, you will need to check the cost of renting a personal accommodation to that of the additional tax liability as a result of the BIK. If the cost of renting an apartment is higher than the extra tax, then you may want to accept the BIK. However, this is a personal choice.
Benefits in kind are provided by an employer as a form of non-cash emolument. It is given in the form of an apartment, an asset such as an official car or a domestic Staff. BIK is an income to the employee. Therefore, they are assessed for tax on PAYE.