Employers that wish to payroll benefits in the tax year 2017-18 must register with HM Revenue and Customs (HMRC) using the online Payrolling Benefits in Kind (PBIK) service before 6th April 2017 (if you had not already registered last year). You can register with HMRC using the PBIKs service Payrolling of benefits was introduced from the start of the tax year 2016/17 and will continue for the tax year 2017-18. Employers can account for the tax on benefits provided to employees through PAYE each pay day.
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. P11D(b) returns will still have to be submitted and must include the total values of all payrolled and all non-payrolled benefits.
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:
• 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. Payrolling Benefit In Kind functionality was incorporated into BrightPay 2016-17 and will continue in BrightPay 2017-18.
For more information about payrolling benefits, make sure to register for our free webinar here.