Muras Matters: Making Good Benefits In Kind


As most readers will be aware ‘Benefits in Kind’ refers to the ‘perks’ received by employees from their employer in addition to their salary. Any benefits for the 2021/22 tax year are reportable to HM Revenue & Customs (HMRC) on form P11D by 6 July 2022.

However, it is possible to reduce or even completely eliminate the tax and national (NI) consequence of the benefit in kind by the employee “making good” the benefit they have received. To make good a benefit in kind for tax and Class 1A NI the employee must make a payment to the benefit provider (usually their employer) by 6 July following the end of the tax year. For 2021/22, the making good payment must be done no later than 6 July 2022.

For certain benefits the making good payment will only be effective provided an obligation to make good existed before the end of the tax year.


The purpose of a making-good payment is to reduce the taxable value of the benefit in kind and therefore the tax and Class1A NI payable on that benefit. Generally, a making good payment reduces the benefit value pound-for-pound. There are exceptions to this however, with the main one being the benefit in kind on private fuel.

In the case of private fuel the benefit in kind can only be eliminated by the employee fully making good the private mileage element. There is no reduction in the benefit in kind for only a part repayment of private fuel. However, given the current rising cost of fuel some employees may want to consider if the taxable benefit may be more cost efficient to them than paying for the private fuel themselves.

For the making good payment to be effective it must be a payment of money or have money’s worth. An employee cannot offer to make payment by providing extra services for free for example.

Acceptable methods of payment include:

  • a direct payment to the employer or benefit provider;
  • a deduction from the employee’s salary (from net pay not gross pay);
  • a debit to a director’s loan account.

The advantage for a director of making a debit to their directors loan account is that it requires no immediate cash payment and actual payment can be deferred indefinitely.

The deadline for making good a benefit in kind is no later than 6 July following the end of the tax year to which the benefit in kind relates. For the 2021/22 tax year this will be 6 July 2022.

For some benefits there is an extra condition in order for the making good payment to be effective and that is that there an obligation to make good existed before the end of the tax year in which the benefit arose. The most common benefits to which this further condition applies are company cars and vans, private fuel and interest on cheap loans.

Where a making good payment is not made by the 6 July following the end of the tax year, then the benefit in kind must be reported in full on the P11D for that the tax year in which the benefit arose. An employee can still make good the benefit after 6 July but it will have no impact in reducing the taxable value of the benefit in kind.

If you would like more information on the making good of benefits in kind or have an queries on benefits in kind in general please contact our Tax Director, Jenny Marks.

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