Reporting benefits and expenses
HMRC has made it clear that employers must submit their reports of benefits and expenses provided to employees (P11D forms) in electronic form this year. All paper P11Ds will be rejected, as will any paper amendments to P11Ds for earlier years.
There are now only two options open when reporting benefits and expenses; Commercial software; or
•HMRC’s PAYE online service – suitable for up to 500 employees on one payroll.
The deadline for submitting the P11D information for the tax year to 5 April2023 is 6 July 2023. We can help you with this task.
Where employer’s NICs are due on the value of benefits provided, this payment must reach HMRC by 22 July 2023, if you pay electronically.
If you find the P11D process a total pain, you could opt to tax the value of the benefits through the payroll during the year –this is called “payrolling benefits”.
Under payrolling, the taxable value of the benefit for the pay period is added to the employee’s taxable pay. The income tax due is then deducted from their gross pay in real time and paid to HMRC. The employer’s NICs are still paid after the tax year-end as now, so a form
P11d(b) must be submitted . The advantages of payrolling benefits are,
•No P11D is required for the employees within payrolling. Employees don’t get a nasty shock of a tax bill after the year-end;
•There are no surprising amounts in tax codes issued the following year; All benefits are visible on the employees’ payslips.
•It reduces the risk of errors, as the employee can see the benefit on each payslip and query it if necessary.
Almost all benefits can be payrolled, the exceptions being beneficial loans and employer-provided accommodation. Payrolling company car benefits removes the need to submit a P46(car) when a car is first provided to an employee.
In order to start payrolling benefits for the tax year 2024/25, you need to apply to HMRC by 5 April 2024. you will need to give your employees a factsheet to explain what is payrolled.