Payrolling benefits in kind

Employers who wish to use this service to payroll employee expenses and benefits instead of submitting forms P11D must register before 5 April 2016. This hopefully will reduce time for employers as currently, even if benefits in kind are payrolled, forms P11d (return of expenses and benefits) are still required and often leads to an employee being taxed on the benefit in kind through the payroll and have a restriction in their coding notice. It will not be obligatory.

This is optional and can be used from 6 April 2016. Why should you use it? Well, it means that the tax due on benefits in kind can be calculated each month based on the anticipated amount of the benefit rather than wait for a coding notice change to be made. It is too late to prevent benefits in kind being included in the initial 2016/17 PAYE coding run but the codes can be adjusted if you register before 5 April 2016.

The effect will be that the benefit will be removed from the tax code and instead the estimated amount of the benefit added to pay simply to work out the tax due.

This new scheme which is voluntary should mean that a sum closer to the correct amount of tax due should be deducted.