TQOTW: P11D's & Payrolling Benefits

With the 2018/19 P11D deadline looming, should I be considering payrolling benefits in future?  What is the advantage? What do I need to do and when?

If you’re an employer you need to submit an end-of-year report to HMRC for each employee you’ve provided with benefits which have not been included in wages. Use form P11D to send the report to HMRC for employees and directors.

The deadline for reporting P11Ds to HMRC is the 6 July following the end of the tax year. This is also the date by which you must provide your employees with a copy of the P11D and tell HMRC the total amount of Class 1A National Insurance you owe on form P11D(b).

Please be mindful that in 2019 the 6 July falls on a Saturday.

Can I make providing taxable benefits to employees easier?

You can now payroll benefits you provide to your employees, as long as you register to do this with HMRC before the start of the tax year that you wish to payroll the benefits. You need to register using the payrolling benefits and expenses online service.

https://www.gov.uk/guidance/payrolling-tax-employees-benefits-and-expenses-through-your-payroll

When you payroll benefits, you add the cash equivalent of the employees’ benefits to their pay and then tax them through your payroll.

If you miss the registration deadline, you can ask HMRC to informally payroll benefits. You can apply by writing to:

Complex Caseworker Team

National Insurance Contributions and Employer Office

HMRC
BX9 1BX

If you informally payroll benefits you must still complete form P11D at the end of the tax year and mark each P11D ‘Payrolled’. This will then stop HMRC collecting the tax that has already been deducted from your employees.

What are the advantages of payrolling benefits?

If you decide to payroll benefits, as an employer you do not need to produce P11Ds for employees. You will however still need to calculate the Class 1A National Insurance contributions and complete form P11D(b) by the 6 July following the end of the tax year.

The main benefits for employees are that their tax will be collected in real time, rather than being collected by means of an adjusted tax code following the end of the tax year.

Whether this is suitable for your business depends on your circumstances. Please call the Helplines if you need more information.


Please share this article with your clients


If you have a tax query, why not contact the Tax Advice Line on 0844 892 2470 to discuss it. Our team of experts have a wealth of experience and can also provide a written consultancy service at competitive rates.

Back to Community
mm

Payroll Adviser
0844 892 2470


Sam is a Payroll Advisor on the tax consultancy advice lines. She holds a CIPP Foundation Degree in Payroll Management and CIPD Level 5 Intermediate Certificate in Human Resource Management. Having worked as a payroll manager in private industry and also in a payroll bureau environment, Sam has over 11 years of payroll experience.

TQOTW: Pension Annual Allowance
TQOTW: EU Fifth Money Laundering Directive
TQOTW: SDLT Higher Rates Transaction