Benefits in kind

About benefits in kind

Benefits in kind ​(BIKs) are anything you provide employees or directors for free or at a reduced cost such as:

• accommodation
  
• a company car
  
• company shares​

You must report BIKs you provide every year, unless they are exempted benefits in kind.

If you provide BIKs you must tell Revenue Jersey. Find out more on registering for BIK returns​.

Controlling directors are taxed on BIKs the same ​way as an employee. The legislation includes all 'office holders', which covers directors of companies as well as employees.

​Employees must declare taxable BIKs on their personal tax return and pay tax on them. You can find more information for employees ​and personal tax obligations on benefits in kind​.​

Any allowances, cash payments or reimbursement of out of pocket expenses are not BIKs. They are part of an employee's salary.

Employment income and tax

You can find details about BIKs in the Income Tax (Jersey) Law 1961​.

Revenue Laws and Regulations​​

Deducting tax and BIK statements

You should not deduct tax at the time you provide the benefit.

You need to provide employees a benefit in kind statement at the end of the year. They will need to declare the total amount on their personal tax return.

Refus​​ing a benefit in kind

Employees can refuse a benefit in kind. They'll need to tell us in writing and state which benefits they refused and the year of assessment it relates to.​

If you offer your employee an alternative to the BIK, this will be subject to tax.

​Registering for BIK returns

​​If you provide taxable benefits in kind to your employees you need to tell us.

To register we need a signed letter from an officer of the business such as the company secretary.

The letter must include:

• date the benefits in kind started
• contact details of the person dealing with the BIK returns, including email and postal address

​Stop providing BIKs

​​If you stop providing benefits in kind you must de-register.

You'll need to send a signed letter from an officer of the business. The letter must include the date benefits in kind stopped.

You must submit all returns up to and including the year you stopped providing BIKs.​

Filing your benefit in kind return

Employers must file their BIK returns online.​

You can file using your own payroll software or the combined employer returns website.

File your combined employer return

Find more information on completing your combined employer return.

If you need to submit or replace a BIK return for 2021 or earlier, contact us.

Deadlines for filing​

You must file BIK returns by the 15 January in the following year the benefits were provided.

If your business stops being an employer or ceases, your return must be filed 15 days after the end of the month.​

​​Adding BIK calculations to your own payroll software

Find details on adding BIK to your own payroll software on our business to business website, including:

• the file specification in an XML format
  
• the formula to calculate each benefit
  
• all relevant information relating to the data needed to make these calculations
  

Developers files on business to business​

​Filing BIK returns using your own payroll software​

You can download an application from our business to business website to validate, encrypt and file your BIK returns produced by your own software.

Read the installation notes and then download the application version 4.1.

Employer return applications on business to business​

Valuing benefits in kind

The value of a BIK is the total direct or indirect costs incurred by the employer for providing the benefit.

However, the value is calculated differently for:

• vehicles benefits
  
• accommodation benefits​
  
• share​ schemes​
  

Some BIKs don't have to be declared and are not taxable. Check out the list of exempted benefits in kind​.​

Changes during the year

If there's a change of benefit or a new benefit, then the annual BIK is proportioned for the period.

For example:

An owned car has a calculated annual benefit of £7,000. This car is replaced on 1 October with a new car for which the annual calculated benefit is £10,000.

Two benefit in kind returns would be completed and the annual benefit in kind would be £7,755. (£7,000 / 365 days × 273 days = £5,235) + (£10,000 / 365 days × 92 days = £2,520)​

​Employee contributions

If an employee contributes towards the cost of a benefit, the contribution is deducted from the calculated benefit in kind.

For example:

An owned car has a calculated benefit of £10,000, but the employee makes a yearly contribution of £2,000. Therefore the annual benefit in kind is £8,000.

Employee contributions in relation to the provision of benefits still form part of their gross taxable pay.​

Global assessment

Employers who want to pay all the tax on ​BIKs instead of the employees being individually taxed may do so in accordance with concession P16.

Concession and practice​

​Vehicles benefits

Exemptions

Some vehicle benefits don't have to be declared and are not taxable.​

Check out the list of exempted benefits in kind.​​​

Calculating vehicle benefits

Step 1: Calculate the value

To calculate the value of a vehicle purchased by the employer:

• if the vehicle was purchased in the year of assessment and first made available to the employee in the same year, the value is the open market cost of the vehicle
• if the vehicle was purchased in a year before the year of assessment it is first made available to the e​mployee, the value is reduced by 20% for each year, on a reducing balance basis, following the year of acquisition but not including the first year of benefit.
• the above calculated value for BIK does not change in subsequent years for as long as the vehicle is available for use by that particular employee.

To calculate the value for a vehicle leased or hired by the employer:

• the value of the lease costs during the year of assessment for that vehicle
  

Step 2: Work out the business usage by the employee

To work out the business usage, divide the mileage that the employee uses the vehicle to carry out their employment duties by the total mileag​e for the year. Business mileage must not include any travel to and from work. Multiply the result by 100 to give a percentage.

You must keep records of business usage.

Step 3: Calculate the benefit

To calculate the vehicle BIK, use the value of the vehicle from step 1 and the business usage from step 2 with the table below.

Step 4: Reductions in the benefit

​​​Work out any othe​r reductions in the benefit such as:

• the benefit is not available for the full year of assessment
  
• the employee makes contributions towards the benefit ​

​Vehicles used for chargeable and exempt purposes

If a vehicle is not exempted​, but is partly used solely for an employee's duties, the benefit in kind charge will be reduced proportionately.

For example, an employee on 24 hour call one week out of four, will have their chargeable benefit reduced by 25%.

Allowance paid to lease a vehicle

If an employer pays an allowance to an employee so that the employee can lease a vehicle themselves then that allowance is not a benefit in kind.

However, it forms part of the employees salary and must be declared as such.

​​Providing fuel

If an employee is provided with fuel this is a chargeable benefit, but subject to a deduction in respect of any used for business mileage.

However, if the employee reimburses the employer with the full cost of the fuel used for private purposes there is no taxable BIK.

Alternative fuel

The additional cost of conv​erting a company car to run on alternative fuels are not taken into account when calculating BIK.

This includes any premium on the price of a car manufactured or converted by the manufacturer to run on alternative fuel.

Record keeping

Keep receipted invoices as details of cost price will be required for company-owned vehicles.

Lease agreements will need to be kept to establish payments due.

For pool cars​ a booking log must be kept showing that the car was available for business use and not habitually used by one member of staff.

We may request this information at any time as well as details regarding the overnight location of the car and where the keys are held.

Find more information you may need to keep in the record keeping section​.​

Accommodation benefits

Exemptions

Some accommodation benefits don't have to be declared and are not taxable.​

Check out the list of exempted benefits in kind.​​​​​​

Calculating accommodation benefits

To calculate the benefit in kind on accommodation:

Furnished accommodation

20% of the employee's salary (all emoluments including bonuses, fees, and commissions but disregarding any other benefits in kind) for the period the accommodation is used, less any employees contributions.

Unfurnished accommodation

15% of the employee's salary (all emoluments including bonuses, fees and commissions but disregarding any other benefits in kind) for the period the accommodation is used, less any employees contributions.

Market value

Alternatively, the benefit in kind can be the open market rental value of the accommodation, less any employees contributions.

We need sati​sfactory evidence of the valuation before the market value is used.

Utility bills payment

If you pay or reimburse the employee any bills relating to the accommodation this is an additional BIK.

​The only exception to this is if the accommodation is a sub-divided dwelling owned or leased by the employer. For example hotel workers living in the hotel where they are employed.

If the employee pays the utility bills or reimburses the employer, these amounts are not treated as a contribution towards the benefit.

Joint acco​mm​​odation

If 2 people living together in​ a relationship are both employees of the same company the benefit in kind is worked out on the salary (emoluments) of the higher earner.

​​Record keeping​

Accommodation benefit is calculated as a percentage of salary (emoluments).

However, if the employee subsequently makes a claim to be assessed on market value, an up to date professional valuation is required, a rec​ord of which will need to be kept.

Find more information you may need to keep in the record keeping section​.

Share schemes​

A benefit in kind can arise from schemes which award shares or options to buy shares at less than their market value. However, the terms of these schemes can be varied and complex.

Unless otherwise determined, Jersey follows the princip​​les set out in UK case law for the taxation of officer and employee share scheme awards.

Jersey income tax practic​​e notes on awa​​rd schemes

​Exempted benefits in kind​

​ Accommodation

For clergymen and ministers

Accommodation provided for clergymen and ministers mainly or substantially for the purposes of their duties is exempt.

On business premises where it's essential for duties

To be exempt, the accommodation must form part of the employer's business premises and ​the occupation of those premises is essential to the performance of the employee's duties as a person responsible for:

• the care and security of those premises 
• the care of persons occupying those premises
• the care of animals kept on those premises​
  

​Approved pension schemes

Contributions made by a​n employer to an employee's approved pension schemes are exempt.

This is restricted by 25% of the pension holder's relevant earnings if they own the company or they are connected to the person who owns the company. Any excess is taxed on the individual as a benefit in kind. This excess can not be claimed as tax deduction.

Bus passes​

The provision of a prepaid bus pass or card for use to travel from home to work or in fulfilment of the employee's duties is exempt.

This is available from year of assessment 2023.

​Business-related entertaining

Business-​related entertaining and entertaining the employer provides to staff generally is exempt.

Cars used solely for an employee's duties​

The provision of a car used solely in the performance of the employee’s duties in an employment which requires the essential business use of a car.

In practice minor incidental use such as travel to and from home to the place of work will not destroy this exemption. Where there is substantial business use (75% or more) but the above criteria are not met, the benefit will be charged but at a lower rate to normal.​​

​Catering facilities

Catering facilities such as tea and coffee or the use of a staff canteen if made available to all staff are exempt.

Beverages provided by vending machine are also included.

​Clothing

The provision for use of specialised or protective clothing supplied by the employer for use at work is exempt.

Wearing the clothing to or from work does not affect the exemption.

Also included is the cost met by the employer to maintain the clothing, for example dry cleaning of uniforms.

Computers

Provision for use of a computer for use in the performance of the duties of the employment is exempt.

​Crèche facilities

Crèche facilities where the facilities are available to staff generally are exempt.

This does not cover circumstances where employers meet all or part of the costs incurred by staff in using external facilities for child care.

Disturbance allowance

A disturbance allowance may be paid instead of the employer covering relocation expenses. The first £7,500 of any disturbance allowance paid to cover the cost of removal of household effects, storage of effects up to 12 months and travel costs is exempt.

The amount paid should not exceed the actual costs incurred. Any amount paid over the actual costs will be treated as part of the employee's salary.

​Equipment used for duties

The provision for use of equipment provided for use in the performance of the duties of the employment is exempt.

​Group life assurance

Group life assurance premiums, other than term assurance, in respect of the employee or family is exempt. This does not cover meeting an employee’s personal costs.

Group medical insurance

Group insurance cover, such as BUPA, for medical costs of the employee or family is exempt. This also includes group cover for dental insurance, critical illness, long term disability.

Guidance on specific schemes should be sought from us if there is any doubt. This exemption does not cover payments made by employers into employees individual arrangements.

​Liability insurance

The employer provides insurance covering liability in respect of alleged negligence by the employee in the course of his duties is exempt.

Long service awards

Long service awards, other than cash, provided the employee has worked for the employer for at least 10 years and the value does not exceed £50 for each year of service, are exempt.

​Meal vouchers

The provision of the first £5 per working day of non-transferable meal vouchers where the employer provides no staff canteen and these are made available to staff generally are exempt.

Medical screening

Medical screening facilities where they are made available generally to those staff for whom it is appropriate on grounds of age, gender or other medical risk factors is exempt.

We will accept for exemption cases where screening is restricted on reasonable grounds. If it is available only to one employee or a select group as a perk it will not be exempted.

The provision of annual ‘flu jabs’ is exempt when provided to staff generally.

Other business expenses

Any other benefits which are insignificant and arise purely incidentally from bona fide business expenditure paid by the employer are also exempt.​

​Parking space

The provision of a parking space by the employer to the employee is exempt.

The following are not covered by the exemption:

• parking season tickets
• parking pay cards
• payment for a private parking space rented by the employee
• payment of a parking allowance​​​​

Payment of professional subscriptions

If the employer pays the professional subscriptions for an employee either directly or the employee pays the subscription and the employer reimburses them and:

• the professional body is on list 3 (HMRC's list of approved professional bodies)
• the expense is incurred in the performance of the employee's duties

then the employer doesn't have t​o report this to Revenue Jersey.

In these circumstances, the individual employee can't claim an expense against their personal tax assessment. 

List of approved professional bodies on GOV.UK

​Permanent health i​nsurance​

Insurance provided by the employer for the employees against the loss of all or part of the employee’s emolument or employment by reason of the employee being unable, through ill-health, to discharge the duties of the employment is exempt. This is commonly known as Permanent Health Insurance (PHI).

Phones

Provision for use of a phone for use in the performance of the duties of the employment is exempt.

This covers both mobiles and landlines.

Pool cars​

To be exempted, the car:

• must be a vehicle that is used by more than one employee (disregarding any office holder or employee who is a member of the family or household of the office holder or employee seeking the exemption) on a frequent basis and it is not used by an employee to the exclusion of others for any period of time whatsoever
• cannot be taken home overnight by any employee other than one whose duties included being on 24 hour call
• keys must be kept centrally at the workplace and not kept by any particular employee

A booking system should also be in place for the use of the car.

Preferential​​ rate or interest free loans

Preferential, or cheap, rate loa​ns or interest free loans are exempt.

This exemption does not cover sums paid to employees to subsidise the interest paid on their loans.

​Printed materials

Provision of newspapers, periodicals and journals for use in the performance of the duties of the employment is exempt.​ ​

Relocatio​n expenses

Relocation expenses incurred by an employee newly recruited or transferred to the Island is exempt. This covers reasonable and actual expenditure on removal of household effects, including a motor vehicle, storage of effects for up to 12 months and travel costs.

By concession, relocation expenses from the Island will be similarly exempt.​

Social security contributions​

Any contributions the employer is required to make to the social security scheme in respect of employees is exempt.

Staff disc​​ounts

Staff discounts on any goods or services ordinarily supplied by the employer in the course of the employer’s business is exempt.

​Training costs

Training costs where the subject matter is related to the duties, or anticipated, future duties of the employee is exempt. This covers study materials, travel and accommodation as well as third party trainers.

Transport

Transport provided within the Island between place of work and home where the employee is working unsocial hours is exempt. These hours are defined as between 10pm and 6am.

Transport provided in the Island between place of work and home for severely disabled employees is exempt.

Records need to be ​kept to ensure that the benefit in kind calculation for each employee can be determined.​

Travel expenses

If an employer reimburses the genuine business expense of an employee's travel expenditure on a business trip, such sums will not be treated as salary in the hands of the employee.

If an employee takes a business trip but chooses to extend it for private purposes, then a benefit would arise on the additional cost to the employer of the private element.

If an employee receives air miles or other similar incentive schemes as a result of business travel, no benefit in kind will be charged (by concession).

​Vehicles designed for carrying goods​

The provision of vans, lorries, tractors or other motorised vehicles designed mainly for the carrying of goods or burden of a business nature or tools of a trade is exempt.

​​Record keeping

​Benefits not available for whole year of assessment

The value of benefits may need to be time apportioned so a diary is required to show the periods in the year they were available.

​Business use

The value of a benefit can be reduced where there is both private and business use.

You need to maintain a log to demonstrate the proportion of business use. For cars this will be based on mileage. For other items another basis may be appropriate. For example, accommodation may be on floor space.

If a reduction in benefit is claimed on the grounds of business use, the employers benefit in kind computation must be backed up by suitable records.

​Employee contributions

You must record any amounts an employee pays to the employer in respect of a benefit that reduces the value to be assessed.

​Exemptions

Where benefits are covered by statutory exemptions you must keep sufficient details to demonstrate that the exemption is properly due.

​​Payment of an employee’s bills

You must keep a record with the details of the payments made for each employee.

​​Provision of goods and services

You must keep a record of all the costs for each employee.

​Transfer of property to employee

​Details of market value are required, including professional valuations where appropriate.