On 6 July, employers across the country submitted their P11D forms to report employees’ benefits and expenses for the previous tax year. However, what employers might not know is that there is another way to report taxable benefits in kind. Since April 2016, employers can choose to payroll their employees’ benefits. While it’s not compulsory (…yet!), the HMRC payrolling benefits in kind (PBIK) service aims to streamline payrolling as it eliminates the need to complete a P11D.
How does it work?
To get started, you will need to register with HMRC to use their online PBIK service before the new tax year commences. If you miss the registration deadline, you cannot payroll benefits until the next tax year. Once you’ve successfully registered, the next step is to let your employees know that, as a business, you’re now payrolling benefits and what it means for them.
If you miss the registration deadline, you can ask HMRC to informally payroll benefits. You have to apply in writing to: Complex Caseworker Team, National Insurance Contributions and Employer Office, HMRC BX9 1BX.
Employers that informally payroll benefits must still complete form P11D at the end of the tax year and mark each P11D ‘Payrolled’. This will stop HMRC collecting tax that has already been deducted from employees.
As explained by HMRC, you also need to provide your employees with the following information before 1 June on their payslip or as a separate statement:
- Details of the benefits you’ve payrolled, for example, car fuel
- The cash equivalent of each benefit you’ve payrolled
- The relevant amount you’ve payrolled for optional remuneration (OpRA)
- Details of benefits you have not payrolled
Employers using PBIK must note that, while you’ll no longer submit a P11D in July, you will still have to file a P11D(B) at year-end.
What are the advantages of payrolling benefits?
As mentioned above, if benefits are officially payrolled, as an employer it is not necessary to produce P11Ds for employees.
The main benefit for employees is that their tax will be collected in real time, rather than being collected through an adjusted tax code following the end of the tax year.
Which benefits can you payroll?
During registration, you must tell HMRC which benefits you want to payroll. You can payroll all benefits, except employer-provided living accommodation and interest-free and low interest (beneficial) loans, which need to be reported on a P11D form.
Need help with PBIK?
If you need advice or help with your payroll, we can help. We work hard to keep your workplace fully compliant with EU employment practices and take care of the complex calculations when it comes to pensions, statutory leave, and expenses. Please get in touch with us online or call us on 01702 466 886.
Don’t forget to bookmark our 2019/20 tax calendar for all the key payroll dates you need to be aware of this financial year.
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