Many employers provide benefits, whether as part of standard reward packages or via flexible reward choice programmes utilising Salary Sacrifice or other Optional Remuneration Arrangements (OpRA).
The resulting benefits may have implications for Tax, Class 1 NICs and Class 1A with P11D and P11Db obligations.
Many of these arrange,ents have developed over long periods of time with both informal and formal arrangements being used regularly.
Informal P11D arrangements using alternates lists and reporting methods ended some time ago with more formal P11D reporting requirements which have moved from paper to electronic.
Equally, employers had also been operating informal Payrolling arrangements to account for tax and NIC arrangements in real time yet avoid P11D filing requirements, after all, no further tax is due! However, informal arrangements are no longer permitted.
The December 2023 Employer Bulletin reminds employers about the need to prepare:
Informal payrolling
If you have had an informal arrangement in place, you must register now to payroll your benefits.
HMRC will no longer accept new informal arrangements, except in exceptional circumstances.
Payrolling expenses and benefits for the 2024 to 2025 tax year
You can register now to payroll your benefits from 6th April 2024.
Using the online service for payrolling benefits and expenses means that you will not have to submit a form P11D. You must tell HMRC which benefits you want to payroll during the registration process.
The tax codes for all employees receiving these benefits will be amended unless you exclude any employees that you do not want to payroll benefits for in the online service.
You can find out more on payrolling and reporting expenses and benefits in kind.
Want to payroll benefits, then PLAN
If an employer hasn’t already registered and implemented Payrolling, and there are pre-existing informal arrangements which must end, or a desire to implements Payrolling then preparation plans are needed setting out the steps to change the project and payroll software budget and a communication plan to let employees know.
Check with your software or payroll service what is needed to transition or introduce the change, and out action into progress – remembering that registration is open now for the 2024/2025 tax year. Some may feel they want to payroll for 2023/2024, after all, the P11D is not required until next summer – the deadline to register for the current year was 5th April 2023 – you’re too late.
So, as part of your New Year resolutions, set a goal to investigate and progress the implementation of Payrolling.
PAYadvice.UK 6/4/2023