Benefits To Payrolling Benefits In Kind

ID-100105797From April 2016, the government is allowing employers to payroll employee benefits in kind. Payrolling is where the employer includes a notional value for benefits in kind as taxable pay in the payroll cycle, meaning that the income tax is collected in real time.

Currently, tax for employee benefits in kind is collected through a tax code adjustment meaning that it is always reliant on HMRC being informed promptly and can result in an under or overpayment of tax.

One of the biggest benefits of the new system is that there will no longer be a need to submit forms P11D or P46 (Car) after the end of the tax year. The exceptions to this are for living accommodation, beneficial loans and credit vouchers and tokens.

A big benefit for the employee is that any changes can be reported in real time, meaning they should not ordinarily over or under pay tax on their benefits in kind.

Employers seeking to register for the service must do so online with the payroll registration service, which is accessed through the government gateway and can be found HERE.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

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