Informally Payrolling of Benefits Changes for 2021-22

From 2021-22 onwards the option will no longer be available for employers to informally payroll benefits by making an agreement with HMRC. Informally payrolling benefits meant the employer did not have to register for payrolling of benefits before the start of the tax year and made an agreement with HMRC. All employers that now wish to payroll benefits in the tax year 2021-22, even if they had this previous arrangement with HMRC, must register with HMRC using the online Payrolling Benefits in Kind (PBIK) service before 6th April 2021 (if you had not already registered last year).

Employers can register with HMRC using the PBIKs service. Registering with HMRC allows you to payroll tax on benefits and expenses without the need to submit a form P11D after the end of the tax year. P11D(b) returns will still have to be submitted and must include the total values of all payrolled and all non-payrolled benefits.

Using the online service, you can:

• Choose which benefits and expenses you want to include in the payroll for the following tax year.
• Add or remove benefits and expenses.
• Exclude employees who receive benefits or expenses but don’t want them payrolled. For these employees you must continue to report the benefit or expense on a P11D (you can exclude an employee at any time in a tax year but once you’ve done this you can’t reverse the decision, in year).

The benefits you wont be able to payroll are:

• Employer provided living accommodation
• Interest free and low interest (beneficial) loans

Tax is collected on benefits and expenses by adding the benefit or expense to the employee’s taxable pay in payroll. Tax is then deducted or repaid as usual as per the employee’s tax code and the details reported on the Full Payment Submission to HMRC. Payrolling of benefits and expenses can be processed for employees in BrightPay 2021-22 and a PBIK form can be produced for employees.

Related articles:

• Budget 2021 – An Employer Focus
• Year End - Frequently Asked Questions
• BrightPay 2021/22 is Now Available. What's New?