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Overview
Services Supplied covers situations where an employer provides or pays for services that benefit an employee personally, rather than solely for business purposes. This can include services provided directly by the employer or arranged through a third party, where the employee derives a private benefit.
While these services are not listed as a standalone item in the GOV.UK Expenses and Benefits A–Z, HMRC recognises them as taxable benefits when the private element of the service is significant. The taxable value is generally calculated as the extra cost incurred by the employer in providing the service, less any contribution made by the employee.
Within the BIK module, this benefit type is represented by a single event type: “Automatically Handled.” This reflects that there is only one outcome: payrolled Income Tax across the year and Class 1A National Insurance via P11D(b). There are no alternative event types for different service scenarios.
Employers should ensure that the services supplied do not fall under any HMRC exemptions (for example, services provided exclusively to enable the employee to perform their duties with only insignificant private use). If the service is non-qualifying or partially private, it should be recorded using this benefit type so that the cash equivalent and corresponding tax and NIC liabilities are applied correctly.
This article explains how these events should be applied with BIK module considerations and how to calculate the benefit value. See below for some other articles to assist with preparing and processing benefits in the BIK module:
- For creating this benefit type at company level, go to Configuring Company Benefits
- For applying benefits to employee records, go to Applying Benefits to Employees: Manual & Data Imports
- For how this looks in Payroll when processing, go to How Payrolled Benefits are Reflected in Payroll
- For National Insurance and Best Practices, please read the National Insurance and Income Tax Handling for Payrolled Benefits article
Contents
BIK Module Configurations and Considerations
Services Supplied could be treated either as a one-off event or as a benefit held over a period of time, depending on the nature of the benefit being provided.
Please Note: If the benefit is a Trivial Benefit but you still wish to record this in the BIK module, then consider using the "Other" Benefit type, also selecting the event type that attracts no Income Tax or National Insurance Liability. See here for more information: BIK Module - Other Items
One-Off Events
Examples of one-off payments include bills or ad-hoc reimbursements for services or goods. The full taxable value arises at the point the payment or reimbursement occurs.
Company-Level Configuration
When configuring this benefit at company level:
Set the benefit to retain until the end of the tax year for leavers to ensure the taxable value is always fully applied.
Since this is a single transaction, do not configure pro-rating based on duration of employment.
Employee-Level Configuration
When configuring this benefit at employee level, within the current version of the BIK module, Benefit Start and Benefit Stop dates are used to calculate pro-rated values. While this logic is appropriate for ongoing benefits, it does not automatically align with the treatment of one-off events.
Enter the full value of the payment as the benefit value
Set the Benefit Start and Benefit Stop dates to the full tax year to avoid incorrect pro-rating.
With this configuration, even if the employee leaves, the full taxable value of the payment will be taxed correctly.
Time-Based or Recurring Benefits
Some payments, such as professional memberships or subscriptions, are linked to a period of time rather than a single transaction. The taxable value can be calculated proportionally based on the duration the employee holds the benefit.
Company-Level Configuration
Retain the benefit, or not all, just be aware that prorating will occur if the employee is made a leaver unless the benefit is retained until the end of the tax year.
Employee-Level Configuration
Enter the full value of the payment as the benefit value
Set Benefit Start and Benefit Stop dates to reflect the period the employee is entitled to the benefit
The module will pro-rate the cash equivalent based on the benefit value, and on the number of days the benefit is held for
Note: If the benefit is time-based, but a prorated benefit value is entered instead (Benefit providers may provide a prorated amount already), then determine a full tax year benefit value, or treat as a one-off event as above.
Ongoing Enhancements
The current release of the BIK module fully supports compliant processing of this benefit type for income tax purposes. While certain behaviours, such as date-based pro-rating, require deliberate configuration for this benefit type, the correct legislative outcome can be achieved through the setup approach outlined above.
Employers can therefore operate this benefit accurately by applying the prescribed configuration.
Future enhancement phases will further refine benefit-specific behaviour to reduce manual intervention, increase automation, and more closely reflect the distinct legislative treatment of one-off benefit events such as Assets Transferred.
Event Type: Automatically Handled
This event type applies when an employer provides a service to an employee that confers a personal benefit. Because there is only one possible outcome for this benefit type, the BIK module applies payrolled Income Tax across the year and Class 1A National Insurance at year-end via P11D(b).
Income Tax Liability |
National Insurance Liability |
Payrolled, across the Tax Year |
Class 1A (Employer Only), P11D(b) |
Working out the Taxable Amount
Employers must determine the cash equivalent of the service, which is generally:
The cost incurred by the employer to provide the service,
Minus any contribution made by the employee, if applicable.
The BIK module currently requires the user to manually enter this benefit value; the system does not automatically calculate it.
For example:
An employer provides an employee with a professional coaching service worth £1,500, paying the provider directly. The employee does not make any contribution.
Step 1: Determine cash equivalent
Cost to employer: £1,500
Employee contribution: £0
Cash equivalent (taxable benefit): £1,500
Step 2: Enter benefit in the BIK module
Enter £1,500 as the benefit value for the service supplied benefit
Step 3: Payroll and NIC treatment
The BIK module will apply Income Tax payrolled across the year,
Class 1A NIC will be reported at year-end via P11D(b).
Important Note: If the service is exempt (e.g. provided solely for business purposes with insignificant private use), it should not be recorded under this benefit type.
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