Payrolling of benefits: From the start of the tax year 2016/17, employers can account for the tax on benefits provided to employees through PAYE each pay day. Employers must register with HM Revenue and Customs (HMRC) using the online Payrolling Benefits in Kind (PBIK) service before 6th April 2016 to start payrolling for tax year 2016/17.
HMRC will amend tax codes before the start of the tax year to remove any benefits previously included. In later years employers changing over to payrolling must register well before the start of the tax year.
Registering with HMRC allows you to payroll tax on benefits without the need to submit a form P11D after the end of the tax year. You can register with HMRC using the PBIKs service
Using the online service, you can:
• Choose which benefits and expenses you want to include in the payroll for the following tax year
• Add or remove benefits and expenses
• Exclude employees who receive benefits or expenses but don’t want them payrolled. For these employees you must continue to report the benefit or expense on a P11D (you can exclude an employee at any time in a tax year but once you’ve done this you can’t reverse the decision, in year)
The only benefits you won’t be able to payroll are:
• Vouchers and credit cards
• Living accommodation
• Interest free and low interest (beneficial) loans
Tax is collected on benefits and expenses by adding a notional value to your employee’s taxable pay in payroll, tax is then deducted or repaid as usual as per the employee’s tax code.
PBIK functionality is planned for BrightPay 2016/17.