Third party benefits

An employee may receive a benefit from a third party in connection with their employment. In general, these are taxed as a benefit in kind (BIK). The employee is chargeable on the benefit under the Pay As You Earn (PAYE) system to the following:

The third party who provided the benefit is generally responsible for accounting for the tax liability. Typical taxable third party benefits are:

  • cash
  • perks
  • the use of cars and vans.

Other third party benefits

Other third party benefits are also generally taxable. These will not be taxed as a BIK if all of the following apply:

  • The third party provider of the benefit is not connected to the employer, either directly or indirectly, in any way.
  • There is no arrangement or scheme in place between the third party provider and the employer, or anyone connected with the employer.
  • The employer has not paid any amount, either directly or indirectly, towards the benefit.

Published: 31 July 2026 Print this page

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