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Where Taxpayers and Advisers Meet

BIK on goods purchased via employer

BurrN12
Posts:3
Joined:Tue Apr 05, 2022 8:30 am
BIK on goods purchased via employer

Postby BurrN12 » Tue Apr 05, 2022 8:42 am

Hi

If the company I work for manufacturers an item having a cost of say £3,000, and a retail price of £6,000. Am I correct in saying that if I purchase this item for £3,001 there is no BIK due and it does not need to be shown on my P11D? I would be having the benefit of a much larger discount than given to anyone else but the company is still making a £1 profit.
The item would be used purely for my own benefit and will not be re-sold for profit.

Struggling to find the info in any official tax document that I can show my employers, they think it should be on the P11D and has BIK implications.

If I were to purchase it for £2,500 then I understand BIK would be due on the £500?

Many thanks,

bd6759
Posts:4254
Joined:Sat Feb 01, 2014 3:26 pm

Re: BIK on goods purchased via employer

Postby bd6759 » Tue Apr 05, 2022 5:32 pm

You are thinking about the decision in "Pepper v Hart".

Where an employer is providing a benefit that is part of its usual business, the value is the additional cost to the employer of providing the benefit. In this case it will be cost of materials and other variable costs, such as electricity. Those costs will be marginal.

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim21110

(Many many years ago I had a discussion with the Inland Revenue (as it was then) about the taxable benefit of the director's wife piggy-backing on a cargo flight. The value was the additional cost of fuel needed for her weight.)

BurrN12
Posts:3
Joined:Tue Apr 05, 2022 8:30 am

Re: BIK on goods purchased via employer

Postby BurrN12 » Tue Apr 05, 2022 8:42 pm

Thank you for the reply.
I've never heard of Pepper v Hart but I'll take a look.

The item I'd be purchasing would be supplied via the usual channels, the only difference is I'll receive a greater discount than normal customers. As long as the company is not making a loss then there is no BIK value?

bd6759
Posts:4254
Joined:Sat Feb 01, 2014 3:26 pm

Re: BIK on goods purchased via employer

Postby bd6759 » Tue Apr 05, 2022 11:36 pm

In your first post you said your employer manufactures whatever it is you are going to buy.

In your later post you say that it will be supplied through the normal channels, and your employer won’t incur a loss.

You’ll need to explain better what will happen.

BurrN12
Posts:3
Joined:Tue Apr 05, 2022 8:30 am

Re: BIK on goods purchased via employer

Postby BurrN12 » Wed Apr 06, 2022 8:51 am

Hi again

The item is a marine engine, it will be ordered, manufactured and shipped the exact same way as any other order. The only difference is that I will purchase it at a reduced price, this price will be slightly above the cost by a couple of hundred pounds, I will save around £2K from the recommended retail price.
My employer will only make a tiny profit, but this sometimes happens with key customers anyway, but I cannot see where my employer can incur any actual cost and hence any BIK.

bd6759
Posts:4254
Joined:Sat Feb 01, 2014 3:26 pm

Re: BIK on goods purchased via employer

Postby bd6759 » Wed Apr 06, 2022 6:12 pm

If you are paying at least the costs incurred by your employer, as sounds to be the case, there is no BIK. Follow the link I gave above and follow the link in that page (near the bottom to page EIN21111). The brewer and beer is a good example.

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: BIK on goods purchased via employer

Postby robbob » Thu Apr 07, 2022 7:37 am

The brewer and beer is a good example.
Sounds like time for a career change for me.


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