If you’re intending to payroll benefits for the 2018/19 tax year you must register them with HM Revenue and Customs (HMRC) before the start of the tax year – 5th April 2018.
How to inform HMRC
This can be done online using the ‘Payrolling employee’s taxable benefits and expenses service’, on the HMRC website https://www.gov.uk/guidance/paying-your-employees-expenses-and-benefits-through-your-payroll Or if you prefer, ask your payroll provider to do this for you
Check the Benefits you can Payroll
You can choose to payroll all benefits except:
- Living accommodation
- Vouchers and credit cards
- interest free and low interest (beneficial) loans
These benefits will continue to be reported on the P11D
Changes to make to the Payroll
The cash equivalent of the employees benefit will then need to be added to their pay for 2018/19 tax year, and taxed through the payroll.
- Set up a ‘nominal pay component’ for each payrolled benefit,
- During the year if the benefit increases or decreases in value, the amount will need to be adjusted.
- Don’t forget to add amend record when an employee joins the benefit, or leaves the benefit during the year. A small tweak to your HR processes may be required.
- HMRC will make sure that the value of the benefit is not included in your employee’s tax code.
Telling your employees
Before you start payrolling your benefits you will need to notify your employees.
They will require:
- A letter explaining that you’re payrolling and what it means for them.
- Confirmation of the following before 1 June after the end of each tax year:
- details of the benefits that have been payrolled, for example car fuel
- the cash equivalent of each benefit that’s been payrolled
- separate details of any benefits you haven’t payrolled
If your employees complete a Self-Assessment tax return they’ll need these details so they can report them to HMRC.
We can help
Should you want to payroll your benefits or expenses please contact the team at David Howard. We will be able to deal with it for you, we will:
- Contact HMRC on your behalf
- Provide you with a template letters for your employees
- Provide the end of year Summary for your employees
Contact the payroll team by completing the form on our website. Alternatively you can call us on 020 8977 3559 at our Hampton Wick office to speak to an adviser.