Payrolled Benefits In Kind (PBIK)
From the tax year 2024 to 2025 and onwards, a new box has been added to the Self Assessment tax return for reporting payrolled Benefits in Kind that are subject to Class 1A National insurance contributions only. This is for student or postgraduate loan purposes.
Reason for this introduction
When HMRC work out student loan repayments, they have incorrectly using the total Pay As You Earn (PAYE) income declared on the Self Assessment tax return. If this figure includes payrolled Benefits in Kind, then Self Assessment would calculate student or postgraduate loan repayments on this.
Student or postgraduate loan repayments are not due on Benefits in Kind taxed through your client’s payroll that are subject to Class 1A National Insurance Contributions only.
This new box will allow entry of this payrolled Benefits in Kind amount that is subject to Class 1A National Insurance Contributions only, separately to the total PAYE income on the Self Assessment tax return.
Who will this impact
This only impacts your clients who are:
- in Self Assessment
- in repayment of a student or postgraduate loan or both
- receiving payrolled benefits in kind that are subject to Class 1A National Insurance Contributions through their employer
To make sure they do not pay student or postgraduate loan deductions on payrolled Benefits in Kind subject to Class 1A National Insurance Contributions, the following action is needed:
Actions to take for the 2024 to 2025 tax return
Report the payrolled Benefits in Kind subject to Class 1A National Insurance Contributions amount in the following boxes depending on how you submit your clients tax return:
- online tax return — box titled Payrolled benefits included in pay from employer which affect your student loan repayments
- SA102 paper tax return — box titled Payrolled benefits included in box 1 which affect your student loan repayments
Actions to take for earlier tax returns
In a previous Agent Update issue 112 HMRC advised that the Self Assessment systems was unable to distinguish between payrolled Benefits in Kind subject to Class 1A National Insurance Contributions only and rest of the PAYE income.
Steps were provided on how to complete SA tax return to make sure of paying the right amount of student or postgraduate loan repayments.
Follow the steps to tell HMRC about a student loan in your return.
For more information see completing Self Assessment tax returns.
Opinion
This change exposes inadequacies in the design of the self assessment process and the assessment for educational loan repayments.
There continues to be assumptions by HMRC that employees can see electronic exchange fields relating to benefits when these may not be easily identifiable to the employee.
Employers are required to notify employee of the benefit items that have been payrolled, some may be shown as negative amounts operating salary sacrifice and other as listed pay elements on the payslip. It is questionable that employees will readily be able to view a hidden field on an RTI FPS file for the individual.
Interesting times ahead, especially with proposed mandation of Payrolling.
PAYadvice.UK 2/4/2025