Where an employee makes a payment to the employer for the provision of a non-payrolled BIK, the payment reduces the taxable value of the BIK. Currently, depending on the type of benefit, there are different dates by which payments have to be made good in order to avoid a tax charge.
In line with previous announcements, Finance Bill 2017 will set the date as 6 July following the tax year in which the benefit is provided as the appropriate date by which an employee has to make good on BIKs so to reduce the value of the benefit.
The changes provide certainty and some flexibility to the arrangements. They also remove the opportunity for some individuals to gain advantages from delaying making good until they have an HMRC compliance investigation.