Voluntary ‘Payrolling’ of benefits in kind goes live

15 October 2015

As one of the measures to simplify the administration of reporting employee expenses, HMRC has opened its new ‘payrolling benefits-in-kind’ online service to employers for registration.  Employers looking to payroll benefits and expenses now have to register with HM Revenue and Customs (HMRC) using the new online Payrolling Benefits in Kind (PBIK) service.  Once registered, these benefits and expenses would not be required to be reported on Forms P11D.  You need to be registered with HMRC by 6 April 2016 for the tax year 2016/17.

As with all cases, there are exceptions! Not all benefits escape the reporting requirements.  Per the latest HMRC update released on 12 October, the following cannot be payrolled:

  • Vouchers and credit cards
  • Living accommodation
  • Interest free and low interest (beneficial) loans

Payrolling benefits and expenses means including the benefit values through the payroll and charging income tax in real time.  Employers (and the payroll software providers) will need to align their software with HMRC’s real time BIK system and register to use the new service by 5 April 2016.    If you don’t register the benefits and expenses you’ll have to report them on a P11D.

Existing payrolling arrangements that you may have had with HMRC will stop on 5 April 2016.  If you have such arrangement in place, then do ensure to register to the new online system.  If these include expenses those mentioned above then you can carry on but you will need to report them on P11D.

Payrolling will suit some employers and employees but not others. It remains to be seen if a voluntary scheme will genuinely mean a relaxation of the burdens on employers.

If you would like to discuss your specific circumstances, please contact Reshma Patel, corporate tax director, your usual UHY adviser or complete our online contact form.