Payrolling benefits: information to give to employees

13 August 2021

HMRC guidance on the subject of payrolling benefits explains the information that needs to be given to employees.

Once an organisation has registered to payroll benefits, they are required to provide their employees with written notification explaining that they are payrolling benefits and the implications this could have for them. This can be done by payslip, email, or letter.

The notification must be sent by 1 June after the end of each tax year and must advise employees that they will not be taxed twice. This is because the organisation registered with HMRC to payroll their benefits prior to the start of the new tax year. 

The following information should be included:

•    Details of the benefits that have been payrolled – for example, car fuel – this can include what the benefits are, their value, the cash equivalent and which ones have been subject to PAYE tax
•    The amount that has been payrolled for Optional Remuneration (OpRA)
•    Details of any benefits that have not been payrolled

Employees should also be advised of what will happen during the first year. They will need to be aware that:

•    Their tax code will change to take out the adjustment for their benefits in kind
•    An adjusted amount will be processed through payroll each pay period, and tax will be applied to that amount
•    At the end of the tax year, they will be told how much taxable benefit they have had in the year and what it was for

New employees

Where there are new employees with payrolled benefits, they must be advised how the benefit will be taxed.
They must be informed that:
•    Their tax code may be amended to adjust any benefits from previous employments
•    The new benefit will not be included within their tax code
•    Any underpaid tax they may be paying through their existing tax code will still be collected through their tax code

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