02 August 2023

If you choose to payroll benefits and expenses, then you must add the cash equivalent of the employees’ benefits to their pay and then tax them through the payroll. In addition to this, HM Revenue and Customs (HMRC) no longer accept new informal payrolling benefits arrangements from 6 April 2023.

If you’re intending to payroll benefits and expenses, you must register them with HMRC using the payrolling employees taxable benefits and expenses service.

However, what if you want to payroll benefits mid-way through the year? If an employer wishes to start payrolling benefits mid-way through this year, they are unable to do so. The employer must register online to tell HMRC they are going to payroll a benefit from April 2024. Once an employer has registered in good time before 6 April 2024, HMRC will automatically update the employees tax codes, to remove the value of the benefit from the tax codes. However, the employer would need to send P11D’s as normal for the 2023/24 tax year.

Further information on payrolling benefits can be found, here.

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