NIC on benefits

[einarp]

We are paying the rent for one of our employees. He is paying his taxes on it but is there also employer's NIC to be calculated on the amount. How does that work? Anyone knows?

[Alpha]

By paying the employees rent you are providing a 'benefit in kind' this will be reported each year on form P11d at the same time you will pay class 1A NI of 12.8% over by the 19th July following the end of the tax year. This is calculated on the amount of rent paid over in the tax year.

Following receipt of the P11d the HMRC will adjust the employees tax code to take into account the value of the benefit to be received based upon what he received in the previous tax year.

[einarp]

...so, if the rent is 1000 pcm, the NIC is 128. If I want to spread the cost over the year (for internal profit reporting reasons) I should record accruals of 128 every month until the end of the tax year when the full amount will be paid?

I find it a bit confusing that this isn't paid monthly to HMRC, rather they wait until the end of the tax year??

[businesssolutions]

Just a monthly accrual would be required to spread the cost throughout the year, so Debit Employers NI, Credit Accruals.

[gj]

Just thought it might be worth mentioning that, if the lease is in the name of the employee, then the rent the company is paying should be treated as net pay and grossed up, for tax and NI and then employers NI paud on top.

However, if the agreement is the name of the company, then the treatment outlined in earlier posts applies


Graham

[einarp]

So there are a lot of money to save by signing the agreement in the right name?|