Payrolling benefits

From next year, you can opt to submit your benefits and expenses online via payroll software and therefore not report them on P11Ds anymore.

How to register

Before using the service you’ll need to ensure your payroll software allows you to collect the right amount of tax on benefits and expenses. You need to align your payroll software and register to payroll using the new service by 5^th April 2016. You won’t be able to register after this date for the 2016/17 tax year as HMRC can’t process changes in-year. To avoid being sent multiple tax codes for your employees you should register before the annual coding process which usually starts around 21^st December.

If you don’t register the benefits and expenses you intend to payroll you’ll have to report them on a P11D.

Limitations of the new service

The only benefits you won’t be able to payroll are:

• vouchers and credit cards
• living accommodation
• interest free and low interest (beneficial) loans

If you’ve previously been payrolling these benefits informally you can continue to do so but you must still report them on a P11D.

Once registered

All payrolled benefits and expenses need to be included when you report your payroll information in a Full Payment Submission. P11D (b) forms must still be completed, including the total benefits and expenses provided, whether or not they’ve been put through your payroll.

An important note for company cars

If you payroll car and car fuel benefit you mustn’t complete P46 (Car) forms as you’re deducting the tax due on these benefits at source. If you use a contracted out company car provider you must notify them of your decision to payroll and ensure they don’t submit P46 (Car) forms on your behalf.

If you’d like someone to look after the day-to-day running of your payroll, including any benefits or expenses, contact your local TaxAssist Accountant who would be happy to help. 

Date published 23 Nov 2015

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.