Payrolling benefits in kind – is this the future?

7th March 2022

HMRC’s most recent Employer Bulletins are indicating a clear shift towards the promotion of payrolling benefits, with the topic being mentioned in nearly every latest issue.

 

The payrolling of benefits in kind shifts the management of the process from annual to monthly reporting, allowing employees to pay tax in ‘real time’ during the tax year in which the benefits are received.

 

If payrolling benefits are to become mandatory in future years, what do you need to know?

 

  • The requirement to produce P11Ds for each employee after the end of the tax year is removed, with just a P11D(B) needing to be submitted to HMRC.
  • With the exception of interest free/cheap loans and living accommodation, all benefits can be payrolled through compliant software.
  • No surprising tax code changes are issued to employees in the following tax year.
  • Communication with your employees about the changes and the way this affects them is key.
  • A year long commitment is needed: employees can only be removed from payrolling if leaving your employment or if their pay falls to less than 50% of the value of the tax on the benefit (i.e. maternity leave).

 

Perhaps the most fundamental point to note is the necessity to register prior to the tax year that you wish to commence payrolling in.

 

To payroll benefits for the tax year 2022/23, registration is required before 5 April 2022.

 

Speak to your Whitings contact today or call the Ely office on 01353 662595.

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