As the P11D deadline for 2018/2019 has passed, it may be worth looking at how you can make providing taxable benefits to employees easier for the future.
What is a P11D form?
If you provide Benefits in Kind (BIK) to your employees that are not included in wages then you must submit an end-of-year report (P11D) to HMRC for each employee and director.
The deadline for reporting P11Ds to HMRC is the 6 July following the end of the tax year. You will also need to provide your employees with a copy of the P11D and tell HMRC the total amount of Class 1A National Insurance you owe using form P11D(b).
What is payrolling benefits and how does it work?
Instead of filling out a P11D form for each employee, you can now payroll benefits you provide to your employees. You will need to register with the HMRC Payrolling Benefits in Kind online service before the start of the tax year that you wish to payroll the benefits.
Payrolling benefits works by adding the cash equivalent of the employees’ benefits to their pay and then you tax them through your payroll each month instead of waiting until the end of the tax year.
Don’t worry if you miss the registration deadline, you can contact HMRC and ask them to informally payroll benefits.
Be aware that if you informally payroll benefits you are still required to complete form P11D at the end of the tax year and must mark each P11D ‘Payrolled’. This will then stop HMRC collecting the tax that has already been deducted from your employees through your payroll.
Which benefits can you payroll?
All benefits can be payrolled except:
- employer-provided living accommodation
- interest-free and low interest (beneficial) loans
You will still need to report these benefits on a P11D, even if you’re payrolling other benefits for the same employees
What are the advantages of payrolling benefits for employers?
As an employer, you will no longer need to produce P11Ds for employees. However, you must still calculate the Class 1A National Insurance contributions and complete form P11D(b) by the 6 July following the end of the tax year.
What are the advantages of payrolling benefits for employees?
Your employees’ tax will be collected in real-time, rather than being collected at the end of the tax year by the adjusted tax code.
Interested in finding out more?
Although there are advantages to payrolling benefits for both employers and employees, it may not be right for your business.
We can help you to decide whether you should implement payrolling benefits. Please contact Charlotte Toemaes on ctoemaes@ellacotts.co.uk or 01295 250401 for more information and to see how we can help you.
Find out more about our Payroll services here.
