Benefits in Kind
Benefits in Kind are ‘perks’ or added benefits provided by the employer which are not included in, but are in addition to, the nanny's salary. They are often taxable and must be reported annually to HMRC as part of nanny's total earnings.
Who pays the Tax?
- Tax on Benefits in Kind is 'paid' by the nanny. However, the employer is responsible for deducting the Tax from the nanny's gross salary.
- The employer pays the Tax to HMRC on their nanny's behalf - like income Tax.
- The will be a Class 1A National Insurance charge of 13.8% of the value of the benefit to be paid - the employer always pays this charge.
- If a gross wage agreement is in place the Tax payable on a benefit will not affect the employer's total cost.
What if I have agreed a Net salary?
Declaring Benefits in Kind
- Our payroll specialists will then get in touch and complete a PD11 form on your behalf and submit this to HMRC'
- We will remind you of the deadline for declaring so you can let us know of any benefits.
Common Benefits in Kind queries
- Mobile phones - Mobile phones are not considered a taxable benefit.
- Accommodation - If accommodation is provided for the nanny and it has a separate front door and separate metering for gas, water and electricity, it is considered a taxable benefit and must be reported as such.
- Nanny Public Liability Insurance - if you paid for your nanny's Public Liability Insurance then it is considered a taxable benefit.
Is a car a taxable benefit?
Use of employer's car
- This is not considered a taxable benefit if the nanny only uses it to carry out her duties e.g. to take the children to and from school.
- However, if the nanny is also using the car to get to and from work and for her own use, then it must be reported as a Benefit in Kind.
Nanny using her own car
- If the nanny uses their own car during working hours, the normal remuneration is 45p per mile
- Above that it is considered a taxable benefit and must be declared. The 45p is to cover fuel as well as wear and tear of the vehicle.