It’s a high price for work perks Why job ‘freebies’ could be costing you a fortune

So-called benefits in kind can actually be very

Check how much they’re costing you

Our tax system is notoriously complex. Take income tax for example.

As a general rule, the first £12,500 of what we earn is tax-free; the next £37,500 is taxed at 20%; and income over £50,000 is charged at 40%.

There’s a higher rate of 45% for earnings over £150,000. And we all pay National Insurance on top.

But you don’t just pay income tax on your “cash income” – your salary and any bonus you have earned.

You also pay it on any benefits in kind (BIK) or “non-cash benefits” you receive as part of your job, such as company car, medical insurance or a season ticket loan. These are summarised on a P11D form but be aware that despite their name, they can be deceptively unkind in tax terms. from your employer by July 6. It shows the value of any taxable benefits in kind you have received.

Even though your employer makes the payments on your behalf, you pay tax on the value of these benefits. They’re not free.

Unless your employer has agreed otherwise with HMRC, the P11D should include any reimbursements you received for certain business expenses you paid.

There is an exemption for any equipment that has been bought to work from home during lockdown.

Keep your P11D safe because you may need it to complete a tax return or claim a tax repayment.

It can also help you review your tax code notice when you receive one from HMRC, to double-check that you’re paying the correct amount.

Essentially, make sure you file it away carefully. It can be very helpful to be able to put your hands on your P11D when you need it – for example, when you need to arrange a mortgage.

It’s important to look at what your benefits cost and ask yourself: “Is this good value for money?”

One common example where the answer may well be “No” is if you have a company car. They can be very expensive in tax terms and what you pay is partly based on CO2 emissions.

You may be able to switch to a lower emission car, or return it and take a cash payment instead.

I also often meet couples who are both members of their employers’ medical insurance schemes, but are also both insured as partners on each other’s work scheme.

This means they will be paying tax on a higher premium. It would be cheaper to have just one medical insurance benefit – probably the one provided to whoever pays less income tax.

Remember, just because something has been provided to you, does not mean it’s good value. So be aware of the tax on your BIK.

WARREN: You’re right to want to act now. Because we’re living longer, we may require more care in the future – and that could have a significant effect on your potential inheritance so don’t bank on it.

Try to cut your expenses to free up some income. Check out entitledto.co.uk to see if you can claim any additional benefits. You may also be able to make money by selling items online or working extra hours.

You have about 96 months to get straight. It won’t be easy but you can do it, if you get a plan.