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Business Tax  •  Payroll Tax

Automatic payrolling of benefits in kind to become effective from April ‘16

By Lesley Stalker on 24 March 2016

The new voluntary payrolling of benefits in kind (PBIK) service is due to become effective from 6th April 2016 after it was formally written into the Finance Act 2015. This was trialed on a voluntary basis after the last Budget and allows HMRC to collect tax due on benefits in kind from employees directly through the payroll. The new PBIK service includes all benefits with the exception of vouchers, credit cards, living accommodation and beneficial loans.

Employers wishing to register for this service must do so before 5th April 2016 if they wish it to be operational for the 2016/2017 tax year.

What are the benefits of the new system?

  • It is a more efficient way for HMRC to collect tax due throughout the year;
  • It will eliminate the need to adjust an employee’s coding notice during the fiscal year and removes P11D reporting requirements in relation to the specific benefits;
  • It offers the flexibility for employers to decide which employees should be covered by voluntary payrolling and who to exclude;
  • Once registered, HMRC will assume that an employer wishes to continue to operate payrolling in future years unless it advises otherwise. The system will work for any pay periods, such as monthly or weekly.

 

Things employers should be aware of when operating the new PBIK service 

  • To use the service, you’ll need your Government Gateway ID and to have enrolled for PAYE online. Agents can’t directly access the service on behalf of clients; 
  • Once registered for the PBIK service, employers will need to integrate their employee benefits data into their main payroll systems;
  • A notional value of the benefits chargeable to PAYE must be included on the employee’s payroll records rather than being included on a P11D. This requires a total cash value of all benefits paid to be calculated and split by the number of payroll payments over a year;
  • Employers will have to report the values of payrolled and non-payrolled benefits. Where car benefits are payrolled, form P46(Car) is not required;
  • PAYE tax must be paid in the relevant financial month but the P11D(b) process remains unchanged. The Class 1A NIC will still need to be reported and paid after the end of the tax year; by 19 July, or 22 July if paying electronically;

Full guidance on how to administer this new process will be issued by HMRC shortly. In the meantime, if you wish to register for the new service and are unsure about the steps involved, please contact Simon Paterson for advice by emailing sp@rjp.co.uk.

Alternatively, visit https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/385148/Voluntary_payrolling_of_benefits_in_kind.pdf and http://www.hmrc.gov.uk/manuals/pommanual/paye58701.htm for more information.

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The new voluntary payrolling of benefits in kind (PBIK) service is due to become effective from 6th April 2016 after it was formally written into the Finance Act 2015. This was trialed on a voluntary basis after the last Budget and allows HMRC to collect tax due on benefits in kind from employees directly through the payroll. The new PBIK service includes all benefits with the exception of vouchers, credit cards, living accommodation and beneficial loans.

Employers wishing to register for this service must do so before 5th April 2016 if they wish it to be operational for the 2016/2017 tax year.

What are the benefits of the new system?

  • It is a more efficient way for HMRC to collect tax due throughout the year;
  • It will eliminate the need to adjust an employee’s coding notice during the fiscal year and removes P11D reporting requirements in relation to the specific benefits;
  • It offers the flexibility for employers to decide which employees should be covered by voluntary payrolling and who to exclude;
  • Once registered, HMRC will assume that an employer wishes to continue to operate payrolling in future years unless it advises otherwise. The system will work for any pay periods, such as monthly or weekly.

 

Things employers should be aware of when operating the new PBIK service 

  • To use the service, you’ll need your Government Gateway ID and to have enrolled for PAYE online. Agents can’t directly access the service on behalf of clients; 
  • Once registered for the PBIK service, employers will need to integrate their employee benefits data into their main payroll systems;
  • A notional value of the benefits chargeable to PAYE must be included on the employee’s payroll records rather than being included on a P11D. This requires a total cash value of all benefits paid to be calculated and split by the number of payroll payments over a year;
  • Employers will have to report the values of payrolled and non-payrolled benefits. Where car benefits are payrolled, form P46(Car) is not required;
  • PAYE tax must be paid in the relevant financial month but the P11D(b) process remains unchanged. The Class 1A NIC will still need to be reported and paid after the end of the tax year; by 19 July, or 22 July if paying electronically;

Full guidance on how to administer this new process will be issued by HMRC shortly. In the meantime, if you wish to register for the new service and are unsure about the steps involved, please contact Simon Paterson for advice by emailing sp@rjp.co.uk.

Alternatively, visit https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/385148/Voluntary_payrolling_of_benefits_in_kind.pdf and http://www.hmrc.gov.uk/manuals/pommanual/paye58701.htm for more information.