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The Carval HR Software Blog

Payrolling of Benefits in Kind - an end to the P11D?

Posted by Jason Sweby

29/01/15 09:30

Jason_Sweby

HMRC regularly consult with payroll software developers on changes to handling payroll in the UK. Carval's Technical Director Jason Sweby was invited to attend a consultation meeting at The Treasury regarding the proposed legislation to allow companies to voluntarily payroll certain benefits in kind (BiKs):

This scheme is intended to be voluntary, with no current intention of making it compulsory. The idea is to allow certain benefits to be paid through the payroll, therefore eliminating the need for a P11D.

Companies that sign up to payrolling of benefits in kind using the Payroll Registration Tool will choose which (if any) benefits they would like to payroll, initially from the following list:

  • Cars
  • Car Fuel
  • Vans
  • Medical Insurance
  • Subscriptions

This covers around about 98% of the Expenses & Benefits currently submitted to HMRC. Some benefits (such as loans) are harder to payroll and will be considered for later inclusion, although the figures demonstrate that these are rarely used these days.

A company will need to sign up for each PAYE Reference separately. Once the benefits are chosen, all employees are automatically "in", and any exclusions have to be entered manually. For example, you might want to exclude foreign workers because of the more complicated arrangements regarding Expenses & Benefits. The list of employees should be kept up to date by HMRC using data from RTI.

The option is there for individuals to "opt-out" of having a benefit payrolled, although other delegates suggested that they wouldn't even give their employees this option, as it would only add to the complexity of running their payroll.

Currently, the employer is still required to pay the Class 1A NIC at the end of the year, therefore the P11D(b) is still required, which means some internet filing will still be mandatory (even if all employees' benefits are payrolled). There was a strong feeling that some employers might like to payroll this Class 1A NIC payment as well, whilst others wouldn't want the cash-flow "hit".

There are many issues still to be resolved, such as what might happen should an employee fall sick and not receive enough pay to cover the benefit payment through their PAYE? Additional fields will also be required in the RTI submissions, which further impacts on your payroll software. Despite having produced draft regulations, HMRC has some way left to go before it can hope to achieve its intended timescale of April 2016 for voluntary payrolling of BiKs.

Conclusion

Carval has always been committed to keeping on top of, and introducing, the latest legislation into Uniwage, its HMRC payroll software, for the benefit of its customers. One thing that really stood out for me was how easy it will be for those of you who have our Uniwage and Expenses and Benefits software to introduce payrolling of BiKs very quickly, should you so wish. All of the details are already there. If you have Unistaff HR software, you benefit even further by being able to use its Integrated Benefits system to set up the Benefits first in HR, which can then be instantly pulled into Uniwage thanks to Carval's single database and integrated software.

Learn more about Carval's integrated HR & Payroll software - download an info  pack >>

Topics: HMRC Payroll News & Updates, HR and Payroll News

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