How can you tax certain benefits in kind through your payroll, and how should you take action if you want to register for this?
Registering for this service should mean a more efficient method of collecting tax on employees’ benefits throughout the tax year, rather than pay the tax after the end of the year. It should also mean that there won’t be any more repeated adjustments to an employees’ tax code.
In addition, you won’t need to report the benefits on a form P11D after the end of the tax year.
If you would like to payroll any benefits for the coming tax year, 2018/19, you must register with the HMRC before the 6th April 2018. Please note that we cannot register for this on your behalf, you will need to register online via your government gateway login.
You can payroll most benefits e.g. car, medical, apart from director’s loan accounts and accommodation benefit, you will have to tell the HMRC which benefits you want to payroll. You can choose to exclude any members of staff who would prefer that you continue to provide a P11D form.
The way it operates is that before the first payroll run of the new tax year, you have to calculate the value of the benefit(s) to be payrolled and add the appropriate amount as a nominal addition to gross taxable pay. If the benefit changed or a new benefit is provided or an employee leaves or joins, you then need to recalculate the figure.
After the end of the tax year, whilst no P11D’s are needed, you still have to send a P11D(b) to HMRC showing the class 1A NIC due on the benefits.
Please note that whilst the system is optional for this next coming tax year, 2018/19, payrolling on benefits is likely to become mandatory in the near future.
As mentioned above if you want to tax benefits through the payroll you need to register before the 6th April 2018, therefore if you are thinking of opting into the scheme, your early attention is essential.
If you are interested in payrolling benefits and want more information please get in touch with Tony Jakara on 0161 495 4700