How much National Insurance do employers pay on benefits in kind?

Full answer

When an employer provides a taxable benefit in kind -- such as a company car, private medical insurance, or a gym membership -- the employer is liable for Class 1A National Insurance Contributions on that benefit. **Key facts** - Rate: **13.8%** of the P11D value of the benefit - Paid by the **employer only** -- no employee NI applies on BIK (unlike salary) - Declared and paid via the **P11D(b)** annual return - Deadline: **6 July** following the end of the tax year (so for 2026/27, due 6 July 2027) - Payment deadline: **19 July** (22 July for electronic payment) **Worked examples** *Company car:* List price £25,000, BIK rate 25% = P11D value £6,250. Class 1A NI = £6,250 x 13.8% = **£862.50** *Private medical insurance:* Annual premium £1,200 per employee. Class 1A NI = £1,200 x 13.8% = **£165.60** per employee *Company van:* Flat BIK £3,960. Class 1A NI = £3,960 x 13.8% = **£546.48** **Benefits exempt from Class 1A NI** Some benefits are exempt and do not attract Class 1A NI: - Childcare vouchers (legacy schemes) - Employer pension contributions - Cycle-to-work scheme equipment - Staff canteen meals (if available to all) - Eye tests and corrective glasses for screen workers **Payrolling benefits** From April 2026 payrolling of benefits became mandatory for most employers. When benefits are payrolled, PAYE is collected in real time through payroll rather than via a P11D -- but Class 1A NI is still calculated and paid via P11D(b) at year end. **Planning point** Class 1A NI adds significant cost to benefits. A benefit worth £5,000 to an employee actually costs the employer £5,000 + £690 (Class 1A) = £5,690 before considering any other costs. Salary sacrifice arrangements can eliminate Class 1A NI on some benefits.

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