To simplify the way that your employees’ benefits, and expenses are taxed, an option to consider for the new tax year is payrolling your benefits. In this blog post, we will explore the ins and outs of payrolling benefits. Including what it is, how it works, what can be included, and how to register. We will also discuss important considerations, as well as the advantages and disadvantages of this approach. So, let’s dive in and learn how payrolling benefits can simplify your payroll process and benefit your employees.
What is payrolling benefits in kind?
In April 2016, HMRC introduced the payrolling of benefits in kind, which offers registered employers the ability to tax certain benefits in kind, in real time, through their payroll system, rather than reporting on the annual P11D forms.
How does payrolling benefits in kind work?
The annual cash equivalent of the benefits in kind is divided by the pay frequency. For example, if your employee is being paid monthly, the annual amount will be divided by 12 months. This will be shown as a notional amount on their pay slip to account for the tax due each pay run.
What can be included?
Almost all taxable benefits can be payrolled apart from employer provided living accommodation, plus interest free and low interest (beneficial) loans. As an employer, you can choose which benefits you want to payroll and can exclude certain employees, including directors.
