Payrolling Benefits – Act Now!
Since April 2016 employers have been able to register to payroll car and fuel benefits, so that the tax on these benefits is paid by the employee through their PAYE code ‘in year’ and accounted for in real time by the employer.
Those employers who already payroll car and fuel benefits, are no longer required to report information regarding these benefits via P46 and P11D forms.
The reporting of car and fuel benefits through an employer’s Full Payment Submission will become mandatory from April 2018. This should give all employers enough time to update their payroll systems and to understand the new processes and in order to get ahead of the game, you can voluntarily submit your employees benefit information via your payroll from April 2017.
IMPORTANT NOTE: If you wish to do this, you MUST register for the scheme NO LATER than 5th April 2017, in order to become eligible for the 2017/18 tax year and your application will need to be authorised by HMRC, so please ensure you allow plenty of time.
Our agent authorisation login will NOT allow us to register on your behalf so you will need to share your HMRC login details with us, if you would like us to enrol for you.
It’s not just car benefits that can be reported – all benefits in kind can be reported, with the exception of living accommodation and interest free/low interest loans.
The main benefit to the employee is that they would be taxed in real time for any benefits they receive, rather than through the current system of getting a reduced tax allowance through their tax code, which can often result in under/over payments of tax.
Should you as an employer decide to adopt this scheme, you must inform your employees of the change and advise that their benefit will be shown as a separate line on their payslips going forward.
Please note, P11D(b)’s will still need to be submitted to HMRC before July each year, to report the Class 1A Employers National Insurance contribution. P11D’s will be issued in the usual way for the 16/17 tax year, and we will send out a separate email later in the year to those of you who are affected.
As last year, there are now exemptions in place for benefits that are paid at cost, or at HMRC’s benchmarked rates, such as uniform allowance, travel and telephone. The full list can be found here: https://www.gov.uk/employer-reporting-expenses-benefits/dispensations
So please remember; if you would like us to register to payroll your benefits, on your behalf, you must supply us with your HMRC login details, ideally no later than Monday 27th March, in order that we have enough time to ensure your registration is cleared in time for the 5th April deadline.