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Payrolling of Benefits in Kind

Friday 16 February 2018
by Nick Butler - Partner and Managing Director of JC Payroll Services Ltd

Contact Nick Butler

April 2016 saw the introduction of voluntary payrolling of benefits in kind, seen by many as the first step towards mandatory payrolling of benefits.

Not all benefits can be payrolled (e.g. vouchers and credit cards, living accommodation and interest free and low interest beneficial loans) so the P11D form will be with us for some time to come but employers who offer to payroll benefits greatly reduce the P11D reporting burden.

Things to consider:

• Employers must have registered before the start of the tax year by logging onto the HMRC online payrolling of benefits in kind service, via the Government Gateway.

• Employers can choose which benefits they wish to payroll.

• Only benefits not registered need be reported on the P11D.

• Employers must still submit a P11D(b) at year end, irrespective of whether they are payrolling benefits or

submitting them on forms P11D.

• When a benefit is registered that benefit will be removed from the employee’s tax code. The employee will be issued with an amended tax code by HMRC.

• Once a tax year has started the employer must continue to payroll all registered benefits for the remainder of that tax year.

• To payroll a benefit the ‘cash equivalent’ of that benefit must be calculated and then split across the tax year as applicable. Tax is then charged on each payrolled benefit.

• All benefits that are payrolled are reported on the Full Payment Submission (FPS).

• From April 2017 details of cars that have been included in the system are included in the Full Payment Submission (FPS).

• Employers who choose to payroll company car benefits must no longer submit form P46(Car) when employees are provided with a new car.

For more information on payrolling of benefits through payroll please contact me on the details listed above or submit an enquiry.

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