What is a Benefit-in-Kind (BiK)?
When your employer gives you a benefit – like a laptop, phone, or tablet through Home & Electronics – HMRC may treat it as a form of income. This is called a Benefit-in-Kind (BiK), and it means you may owe income tax on the value of that benefit.
This isn't something new. Your Home and Electronics benefit has always been a Benefit-in-Kind – what's changing is simply how it gets reported to HMRC, and when that means the tax is collected.
The good news – you don’t pay this tax upfront. It’s collected gradually, either through your monthly pay or adjusted in your tax code – depending on how your employer handles it.
How this works for Home and Electronics
There are three things to understand about how your tax is calculated and collected:
When does the tax arise?
The taxable value is created when the equipment is provided to you and ownership transfers to you, and is spread across the remainder of the tax year. In most cases, this happens when your order is delivered to you.
How is the amount calculated?
The amount you’re taxed on is whichever is higher:
the standard value of the benefit under HMRC’s benefit-in-kind rules, or
the amount of salary you gave up (sacrificed) to receive the benefit.
How is the tax spread?
Tax is spread across the remaining months of the tax year from the date your benefit is provided – not the full year. So if you receive your benefit in February, the tax is split across just the final two months (February and March), which means a higher monthly deduction than if the benefit had been received earlier in the year.
When will I pay the tax?
This depends on whether your employer has opted into “payrolling of benefits”.
There are two possible ways your tax will be collected:
Option 1 – Through your payslip (payrolling of benefits)
If your employer has opted into payrolling of benefits — either voluntarily now, or once it becomes mandatory from April 2027 — the tax is deducted monthly from your salary and shown on your payslip. Deductions are spread across the remaining months of the current tax year from when your benefit starts.
Option 2 – After the tax year, via a P11D
If your employer hasn’t yet opted in (which may apply for the 2026/27 tax year), your benefit will be reported to HMRC on a form called a P11D, submitted in July 2027.
Because HMRC won’t know about your benefit until then, tax won’t be collected until after that date – usually by adjusting your tax code in the following tax year.
If you’re not sure which option applies to you, check with your HR or payroll team.
What you'll see in your account
In your My Account → Orders, you can view a full breakdown of how your benefit affects your pay, including:
Your estimated total tax amount
Your monthly repayment amount
The number of months payments will run for
When deductions are expected to happen
Please note these figures are estimates. Your actual tax may vary depending on your salary, your tax code, or changes in your personal circumstances. Your employer’s payroll team will calculate the final amount.
What if the full tax can’t be collected?
There’s a legal rule that caps how much tax can be deducted in any single pay period: no more than 50% of your gross salary. If your benefit is high relative to your pay, some tax might not be fully collected during the year.
If this happens, you don’t need to do anything. HMRC will handle any shortfall automatically through their end-of-year process, using one of these methods:
A P800 tax calculation — a letter from HMRC showing what you owe or are owed
A Simple Assessment — a bill sent directly to you
Through your Self-Assessment tax return, if you complete one
What if I leave my job before all the tax is collected?
If you leave employment and there isn’t enough remaining pay to cover all the tax, the same end-of-year process applies. HMRC will contact you if anything is still owed. You don’t need to chase this yourself.
Why is this changing?
From April 2027, UK law will require most employers to process benefits tax through payroll in real time, rather than reporting it after the year end. This is called mandatory payrolling of benefits. The aim is to make tax collection more accurate, more transparent, and better timed with when benefits are actually received.
Until April 2027, whether you’re taxed through payroll or via P11D depends on whether your employer has already opted in early.
It's worth noting – the total amount of tax you owe isn't changing. The benefit has always been a BiK – this is just about when and how that tax is collected. The new rules make the process more transparent and better timed to when you actually receive your benefit.
Still have questions?
If you're unsure about how this affects you personally, your HR or payroll team will be able to help.