Since April 2016, HMRC allows you to register for payrolling benefits, all the details about this is detailed on Government Gateway – payrolling benefits page.
We at Expert Payroll Services can help you register for payrolling benefits and also help you process this through payroll and report these to HMRC via monthly RTI FPS file.
Things to consider before going ahead with registering:
Please note, once you register with for payrolling benefits, during the first-year employees will have both P11d tax code adjustment and also have tax deduction for the current tax year. This means employees with payrolling benefits will have more tax deducted, one via tax code reduction for previous year benefits and tax deducted for current year benefits. It is very important that you communicate this to employees and agree a plan before signing up for this.
Registering with HMRC:
You got to register for payrolling benefits with HMRC before you can start putting this through payroll and taxing the figures.
To register follow the steps detailed here – Registering for payrolling benefits
Benefits you can register:
You can payroll all benefits except:
- employer provided living accommodation
- interest free and low interest (beneficial) loans
Please make sure your payroll software/service provider supports this function. At EPS, we use Accord Payroll software which is HMRC recognised software and also supports payrolling benefits.
Benefits are calculated in payroll and accumulated separately and reported to HMRC under BIK field id on RTI FPS file.
What happens to P11d and P11d(b):
You still have to process P11ds for any benefits that weren’t put through payroll and also submit P11d(b) form to HMRC.
You must keep a record of benefits you give throughout the tax year so that you can accurately report and submit your P11D(b) and the Class 1A National Insurance contributions payment. This must be done by 6 July after the end of the tax year.