---
title: Should I Put Benefits and Expenses Through the Payroll?
description: Learn why companies are opting for Payrolling benefits & expenses instead of P11D reporting. Understand the difference and the necessary steps for employers.
image: https://www.dhpayroll.co.uk/hubfs/gdpr%20and%20payroll.jpg
---

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# Should I put Benefits and Expenses through the Payroll?

 June 15, 2020

![Should I put Benefits and Expenses through the Payroll?](https://www.dhpayroll.co.uk/hubfs/gdpr%20and%20payroll.jpg)

Many Companies are now choosing to Payroll benefits and expenses, rather than report them on a P11D at the tax year – but what does this really mean?

Whilst a P11D is no longer required for benefits that have been put through the payroll, the employers still need to file a P11D(b) to report benefits for Class 1A National Insurance. However this is a much simpler form and removes the risk of P11D fines for late filing.

By payrolling benefits on a real time basis employees will be more likely to pay the correct tax due on their benefits each month via PAYE. Whilst preventing employees from getting surprise tax liabilities at the end of the year, it does mean the employees are paying tax sooner than they have done in the past.

In the first year that benefits are payrolled there may be cases where the employee is effectively paying tax on two years’ worth of benefits in one go, where a prior year underpayment is included in their tax code. Therefore, employers should consider this when communicating any changes to their employees.

**Benefits you can Payroll**

If you wish to payroll any benefits and expenses in the 2018/19 tax year you will need to register the request with HMRC before the start of the tax year, 5th April 2018.

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

**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](https://www.dhpayroll.co.uk/) 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

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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.

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