What Is Benefit in Kind (BIK)?
By PayMetric Labs Research Desk
Short answer
A Benefit in Kind (BIK) is a non-cash perk from your employer, like health insurance or a company car, that's typically taxed as if it were extra salary.
Common BIKs include private health insurance, company cars, subsidised gym memberships, and employer-paid mobile phones or gadgets above certain thresholds. Because these benefits have real monetary value, both HMRC and Irish Revenue generally tax them, either through your payroll (added to your taxable pay) or via a separate declaration, depending on the benefit and jurisdiction.
The tax charge is usually based on the cash value of the benefit to you, not necessarily what it cost your employer. Company cars are a well-known example where the BIK charge depends on the car's value and emissions rather than a flat rate, which is part of why electric company cars have become a popular perk: their BIK rates are significantly lower.
Some benefits escape BIK tax entirely if structured correctly. Employer pension contributions (whether to a UK SIPP or, since the 2024 reform, an Irish PRSA) are a notable example: routed as an employer contribution rather than salary, they avoid BIK tax altogether, which is exactly why pension contributions are such an efficient way for directors to extract value from a company.
Model this with a calculator
Related terms
This glossary entry is for general information only and does not constitute financial, tax, or legal advice. Rates and thresholds shown reflect current published guidance and may change.