Payrolling benefits in kind: important new requirement

13 February 2018

Are you an employer who has opted to payroll some or all of your employees’ benefits in kind? There is a new reporting requirement coming that you need to be aware of.

The 2016/17 tax year was the start of HMRC’s push towards ‘payrolling’ of benefits in kind. In short, rather than submitting a P11D at the end of the year for each employee, you can make an adjustment to their payroll each month, and then simply report a single figure to HMRC at the year-end, being the total of all benefits provided.

This offers two major advantages; accuracy and, in theory, reduced admin due to the lack of individual P11Ds at the year-end.

In addition to collecting tax on certain benefits in this way; employers can also provide details of new cars being provided to employees. This information was always previously required via a ‘P46 Car’ submission, but can now be submitted electronically.

From April 2018, it will be mandatory for any employer who has opted to use the payrolling service for benefits in kind to provide the details of new cars via their monthly FPS submission.

This is a fundamental change and has not been well publicised by HMRC. Employers who have never submitted car details electronically may struggle with these submissions due to their payroll software not containing the details of outgoing cars.

The P46 Car is also historically a submission that many employers have not kept on top of, and has never had much attention from HMRC. This shift to an electronic reporting requirement could signal their intention to crack down with penalties.

This is just the latest example of payroll becoming more and more complex, and an area where professional help can be of more value than ever. If you think you could benefit from outsourcing your payroll and would like to arrange a fee quote, speak to your usual UHY contact or fill out our contact form here.