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Payrolling Benefits or PD11’s?

21st Mar 2022

Do you want to Payroll Benefits in Kind instead of issuing P11Ds?

Employers can choose to payroll their employees’ benefits. The HMRC payrolling benefits in kind (PBIK) service aims to streamline payrolling as it eliminates the need to complete a P11D.

Register for payrolling benefits and expenses

To get started, you will need to register with HMRC before 5th April to use their online service before the new tax year commences. Unfortunately, HMRC have not granted permission for Agents to be able to do this on your behalf, so you will need to do this yourself. If you miss the registration deadline, you cannot payroll benefits until the next tax year. Once you’ve successfully registered, the next step is to let your employees know that, as a business, you’re now payrolling benefits and what it means for them. You will also need to let us know!

What are the advantages of payrolling benefits?

The main benefit for employees is that their tax will be collected in real time, rather than being collected through an adjusted tax code.

  • Employers no longer need to submit P11D and P46(Car) forms to HMRC
  • Simpler PAYE codes mean we receive fewer queries from employees regarding tax
  • Tax deductions in monthly payroll will be more accurate
  • Tax codes for individuals should change less frequently
  • Fewer forms for employers to complete at year-end

Which benefits can you payroll?

During registration, you must tell HMRC which benefits you want to payroll. You can payroll all benefits, except employer-provided living accommodation and interest-free and low interest (beneficial) loans, which need to be reported on a P11D form.

Employers using PBIK must note that, while you’ll no longer submit a P11D in July, you will still have to file a P11D(B) at year-end.