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Set up a benefit in kind (BIK) payment and assign it to an employee

Created on  | Last modified on 

Summary

How to set up a benefit in kind with your Sage Payroll software.

Description

Benefit in kind (BIK) is any employee remuneration, which isn't part of their normal pay which you process through the payroll. You include BIK on an employee's payslip for the purposes of calculating tax, pay related social insurance (PRSI) and universal social charge (USC), without actually paying the BIK amount to the employee. This is known as notional pay.

NOTE: Tax, USC and PRSI is calculated on actual pay + notional pay. However, the employee only receives actual pay through the payroll. It's assumed that the employee received the BIK outside of the payroll, such as through the private use of a company car.

Resolution

Set up a BIK payment
  1. On the menu bar, click Company/Payroll then click Payments.
  2. Click New, then set up the BIK payment as follows:
    Title Enter the name of the payment, for example, BIK Car.
    Type Click Benefit In Kind.
    BIK Type Click one of the following options:
    • Company Car.
    • Medical Insurance.
    • Staff Housing.
    • Other.
    Pay as Nett If you want to pay the tax, PRSI and USC on the benefit in kind for your employees, select this check box.
    Universal Social Charge If the payment is subject to universal social charge (USC), select this check box.
    Include in pension calculation If the payment is subject to calculation, select this check box.
    Apply Pension Related Deduction If the payment is subject to pension related deduction (PRD), select this check box.
    Factor Ignore this option.
    Multiply by the number of holiday periods If you want the value of this payment to adjust according to the number of holiday periods you enter on an employee's timesheet, select this check box.

    NOTE: This option only available in weekly and fortnightly payrolls.

    Formula  Ignore this option.
  3. Click Save, then click Close.
Assign a BIK payment to an employee

There are two different ways you can enter a BIK payment amount for an employee in Sage Payroll. The one you use depends on whether the BIK value stays the same each period or not.

If the BIK amount stays the same each pay period
  1. On the menu bar, click Processing then click Employee Details.
  2. Next to the Surname box, click browse  and click the relevant employee.
  3. Click the Payments tab.
  4. Locate the BIK payment, then enter it's value in the Std. Amount column.
  5. Click Save, then click Cancel.

NOTE: If the BIK amount doesn't appear when you're processing the employees' pay details, delete the timesheet and re-open it. The BIK amount should now appear automatically and you can save the timesheet.

If the BIK amount fluctuates from period to period
  1. On the menu bar, click Processing then click  Time and Pay.
  2. Under Entry mode, select Random then click Continue.
  3. Next to the Employee box, click browse  and click the relevant employee.
  4. On the Data Entry tab, locate the BIK payment and enter it's value in the Hrs/Val column.
  5. Enter the rest of the employee's pay details as normal, then click Save and Cancel.