Third party benefits

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

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 benefit in kind if all of the following apply:

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