Voluntary Payrolling for a BiK where the new OpRA rules apply

10 August 2017


HMRC has circulated information regarding a concession for employers who are voluntarily payrolling Benefits in Kind (BiKs) in the current tax year under the new Optional Remuneration Arrangements (OpRA).

 “…I am writing to clarify the position for employers who are voluntarily payrolling Benefits in Kind (BiKs) in the current tax year under the new Optional Remuneration Arrangements (OpRA).

Employers who have registered to payroll BIKs are seeking clarification regarding the submission of P11Ds when payrolling under OpRA. Some of these employers have been payrolling the tax on OPRA but identify that a P11D will still be due.

The current legislative position is that the relevant amount should be reported on Form P11D.  However, we appreciate that this will be a burden to employers as they may need to send two separate returns for the same BIK therefore we propose the following concession for employers in this position for 2017-18.

Where an OPRA employer has:

  1. registered with HMRC to payroll BIKs outside of OpRA for the 2017-18 tax year

  2. and is deducting tax for a BiK which is subject to the OpRA reform

There will be no requirement to complete a P11D as long as they report the Relevant Amount, (per the valuation rules in ITEPA) along with the taxable amounts for payrolling periods through RTI.

Example;

£6000 is the relevant amount for 2017/18 in respect of a company car. The employer payrolls from September 2017 and deducts the tax due in respect of the £6000 from the employee’s wages for the remainder of the tax year.

Please note this concession only applies to employers who registered to payroll BiKs for 2017/18 outside of OPRA and have been payrolling Relevant Amounts where there is tax due.”

We asked HMRC some follow up questions:

  1. Is this only for 2017-18 i.e. for employers who are payrolling in 2018-19 they will have to complete a P11D as well as process payrolled amounts through their FPS?

  2. The term Relevant Amount, (per the valuation rules in ITEPA), is this the value of the ‘greater of’ amount?

HMRC confirmed that:

  1. The concession to allow employers who are currently payrolling OpRA, is solely for 2017/18, because PAYE regs are not in force as yet. Employers payrolling OpRa will not need to submit a P11D in 18/19

  2. The relevant amount is indeed the greater of the cash equivalent of the BiK or the cash forgone in relation to the BiK

Further updates on this concession are due to be published and we will update you when more information becomes available. In the meantime you can email employmentincome.policy@hmrc.gsi.gov.uk if you have any questions.