Tick-Tock time is running out to register to use HMRC Payrolling Benefits in Kind online service

29 March 2016

 

As from 6 April and for those employers who have, by 5 April 2016, registered with HMRC Payrolling Benefits in Kind online service they will be able to take advantage of the regulatory framework that will be in operation to enable employers to voluntarily payroll benefits in kind (BIKs).

Voluntary payrolling will provide a regulatory process for the employer to take the value of the ‘cash equivalent’ of the benefit in kind, and apply a proportion of it to each pay period identified for the coming tax year, thus accounting for the collection of tax in real time. For an employee who is regularly paid and who is provided with the same or similar package of BIKs each year, this should prove to be a relatively straightforward process.

Reportable expenses and BIKs for the 2015/16 tax year will need to be reported, as before, on form P11D for income tax to then be collected by way of an adjustment to the tax code.

Excluded from voluntary payrolling, for the present time at least, is:

  • Accommodation
  • Beneficial loans, and
  • Credit tokens and vouchers (Spring Budget 2016 announced that measures are to be actioned to include these by April 2017)

There is no change being made to how the ‘cash equivalent’ of the benefit in kind is worked out and nor will this process impact on the calculation of Class 1A NICs or processing of P11d(b).

Pre-registration is a vital element of voluntary payrolling and for employers who wish to begin voluntary payrolling, they will need to register with HMRC’s new Payrolling of Benefits In Kind registration service (PBIKs). Employers should, however, not do this before they have discussed the subject with their software provider or their payroll provider. Be aware also that existing informal payrolling arrangements with HMRC will be phased out from 5 April 2016.

Employers who choose to register to begin voluntary payrolling will no longer be required to report ‘payrolled’ benefits in kind on a form P11D neither will they need to submit form P46 cars. Other benefits in kind that are not processed through voluntary payrolling will however still need to be reported to HMRC on the P11D.