Air Miles: P11-D & BIK implication

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Would airmiles be classed as a benefit in kind (BIK)?

In a limited company, it is quite common for directors and the employees to have company credit cards that they use to purchase goods on behalf of the company. The company credit card generates air miles. If the airmiles are given to the director/employees, would this be classed as a benefit in kind (BIK)?

As per Section 204 Income Tax (Earnings and Pensions) Act 2003, the BIK would be the expense incurred in or in connection with the provision of the benefit.

In other words, the BIK would be the cost of the provision – the cost to the employer on providing the airmiles.

If airmiles are a benefit in kind (BIK), how is the BIK valued?

If the company was purchasing airmiles and then giving them to the director/employee, there would be a BIK. The BIK would be the cost to the employer of purchasing those airmiles.

In comparison, if a director or employee uses the company credit card to make purchases, pay for business travel, etc. on behalf of the business and as a result, they just so happen to receive airmiles when they do so, there is no cost to the employer for the provision of the airmiles received in this manner and no BIK. The airmiles are not being bought by the employer. The airmiles would not have cost the employer anything. The company has not paid for the airmiles, the company has paid for the goods/services.

For example, the business puts in fence panels for its clients. The employee purchases the fence panels from a wood merchant using the business credit card, and they just so happen to earn airmiles in the process. Since the company bought fence panels instead of airmiles, there is no expense to the employer for the providing of those airmiles.

If the employer had to pay anything for the actual use of the airmiles on non-business journeys, the BIK would be the cost to the employer.

To summarise:

The key question is if there was any cost to the employer on acquiring the airmiles? If yes, that is a Benefit in Kind.

The exact tax and NIC treatment would depend on the facts of the particular case. Contact us if you wish to discuss.

HMRCs guidance can be found in the Employment Income Manual at

P11d on Air miles
P11d on Air miles

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