Benefits in Kind for non-employees

MelanieM Registered Posts: 12 New contributor 🐸
Hi, this is not my area of expertise but i've been asked the question by someone i'm currently working for and am hoping someone will be able to help out a bit...

The owner of the company i'm working for provides BUPA health care for a few employees aswell as herself. She has also provided it (through the company policy) for her son for many years, and paid the tax payable on it herself ( if she was receiving the benefit). Her son is now in his 30's and not a dependant or related to the company at all in any other way. The owner would now like to put her son's partner on the policy aswell, which is what she's checking about.

She feels that as she owns the company, and is also willing to pay the tax payable on the benefit for both of them, that it is okay. However, I am unsure as the company is still paying for the actual premium, and they are receiving a benefit, even though they are not employed by or a dependant of an employee. Could this also be seen as a way of avoiding paying tax by the company.

I know it's a bit of a tricky area, and i don't want to ask HMRC as it has been going on for years and could get them in trouble iif it should not have been allowed...

Any thoughts and help greatfully appreciated...



  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
    Hi Mel

    This is an educated guess, as I'm not overly hot on P11D stuff... :001_tt2:

    Either it's a BIK on her, and thus tax and 1a NIC payable on the son+wife's benefit. It's a company expense as it's a benefit paid to the director.
    Or, it's a director's loan and not a company expense, meaning more CT to pay.

    If the healthcare is in the company name and they get a more favourable rate because of it, I'd guess it was a BIK.

    The only thing that's niggling me is whether its an expense allowable against CT, and I guess if she's receiving it as a BIK then it has to be.

    As I said, not 100% on this one but those are my thoughts :)
  • payrollpro
    payrollpro Registered Posts: 427 Dedicated contributor 🦉

    The BIK rules apply to anyone receiving a benefit by reason of their employment so someone who is not an employee cannot have a BIK, thats the simple bit.

    The rules do get a bit more complex when the benefit is enjoyed by a connected person who is not an employee, hence the old ruse of providing a company car to your son or daughter at Uni.

    Now a company car is caught as it is a benefit on the employee even if it is for the exclusive use of their child. Other benefits are not so clear cut and you need to look up the relevant references in 480 and CWG5, the two benefits manuals, you will find it on the CD Rom or on the HMRC website. Look particularly at paragraph 1.22 where HMRC specify that benefits provided to a specific list of individuals are deemed to be provided to the employee. There are few exceptions.

    The CT rules are complex as well because only those costs related to the business are allowable against CT so be very careful about offsetting the BUPA charges as it may be difficult to argue that they are a genuine cost to business.

    i strongly suggest looking at all of this and persuading the company to make the appropriate declarations, preferably as a voluntary disclosure. This will allow them to pay off the benefit tax, unless they opt to submit late P11D's, without incurring too much by way of penalty.

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