Register for payrolling benefits and expenses
If your considering payrolling benefits and expenses from April 2022, they need to register. This will give time to check software capabilities and also inform employees before the start of the 2022 to 2023 tax year.
Payrolling is considered to be quicker easier and more real time. It’s also more secure and HMRC can tell employers straightaway if any common errors have been made. Employees will also see the benefits as they will pay the right tax at the right time on their benefits as opposed to receiving a late and large multi year tax demand.
If an employer registers for payrolling, they will:
- not need to use the legacy P11D system in future
- save paper which will be much better for the environment
During the online registration process, the employer will tell HMRC which benefits they want to payroll. The tax codes for all employees receiving these benefits will be amended, unless they exclude any employees they do not want to payroll benefits for.
Benefits you can payroll
You can payroll all benefits except:
- employer provided living accommodation
- interest free and low interest (beneficial) loans
You must still report these on a P11D, even if you’re payrolling other benefits for the same employees.
If you choose to payroll company car benefits, you do not need to submit a form P46(Car) unless the car benefit is not being payrolled.
The reporting of payroll company cars is subtly different to the P11D and does entail an element of offset and timely information. There is a transformation to be undertaken.
Informal payrolling has ended
If an employer has had an informal arrangement in place they must:
Employers who had an informal agreement with HMRC to payroll benefits for 2020 to 2021 tax year must continue to submit P11Ds marked ‘Payrolled’. However, the employer should plan to formalise this agreement as soon as possible. HMRC will no longer accept new informal arrangements.
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