BIK vs Salary Sacrifice Benefit

Hi all, I've recently received a P11D from my old employer with a lot of "taxable" claims and wanted to find out if this is right or wrong (I believe it to be wrong). I signed up for salary sacrifice benefits that are payrolled and deducted from my monthly salary. These have all been included in the P11D... but why? Example payslip Dental -30.00 GymFlex -80.00 Sal Sac Car -1000.00 My take home GROSS salary is reduced by £1,110.00 every month and I am taxed/NI on the remaining amount. If I have to pay the P11D, then I'd be paying more for Dental and Gym then I would normally going directly to them!! This seems wrong My employer makes NO contribution to these benefits. HMRC have asked me to speak to my employer to find out the cost to them for each benefit... Any help would be greatly appreciated

Hi, not HMRC Admin but it is an easy answer. You've given up salary in exchange for the benefits in kind. So instead of being taxable on the salary, you're now taxable on the benefits in kind. The amount on the p11d isn't the amount you're liable to pay though. Its the amount you're liable to pay tax on. So if p11d is £3000, you'd owe £600 as a basic rate payer and £1200 as higher rate.

So why would anybody use these salary sacrifice benefits if they cost more in the long run. It was not explained to me that I'd get a P11d at the end of the year and have to pay more for these benefits. This makes no sense. I'm paying for a slightly discounted Dental and Gym membership that my work are not contributing towards... how is this a BIK?

Hi, With salary sacrifice you aren't actually paying for the benefit. In order to pay towards the benefit, it would need to come from your take home (after tax & NIC) pay. With salary sacrifice you're swapping £x amount of salary for £x amount of benefit (rather than paying towards the benefit from your take home pay). Only certain salary sacrifices offer tax savings. Like EVs, employer pension contributions, cycle to work etc.

Thank you. So do I still need to pay tax on my EV then? As the P11d is stating £1000 for my EV, or is this part of a tax saving

Yes you do still pay tax on the EV but the tax you pay on the EV will be much less than the tax you would've paid on the salary and that is where the savings are.

Hi Alexander Darling,
Since 6th April 2017 changes to the legislation mean that the tax and National Insurance Contributions (NICs) advantages where benefits in kind (BIK) are provided through salary sacrifice (called Optional Remuneration Arrangements (OpRA) in the legislation) are now largely withdrawn and taxable.
Exemptions to this are childcare,cycle to work, pension advise, pension contributions.
For further understanding please see:
EIM42750 - Salary sacrifice: what is a salary sacrifice: arrangement of guidance
Thank you.