Payroll benefits

Payrolling of benefits: Time is running out!

Rebecca Aimey
Written by Payroll Manager, Rebecca Aimey

Employers who would like to formally payroll benefits for the first time, must register with HMRC before 6th April 2024. Time is running out to register!


Eight years ago, HMRC introduced the ability for employers to payroll benefits that are classed as a benefit in kind. This has enabled a change in the way employees are taxed in relation to any benefits in kind received from their employer.  Instead of paying the tax on these benefits in arrears at the end of the tax year via the submission of a P11D, payrolling the benefits means that employees pay the tax in real time in the month/year the benefit is received.


There are other advantages to the payrolling of benefits and they are as follows:


  • P11Ds no longer needed for employees
  • Reduces the risk of errors
  • Employees pay tax in real time
  • All benefits visible on employees’ payslips
  • No surprising tax codes issued the following year


At the end of the tax year the employer will still need to submit a P11DB to pay the Class 1A National Insurance but no P11Ds are needed for employees. 


How to register?


The registration is currently voluntary and does require the employer to sign up to the scheme before the beginning of the new tax year, to ensure they can start payrolling benefits from the start of the new tax year. 


Payrolling of benefits in kind to become compulsory


The Government made a big announcement on 16 January 2024 that payrolling of benefits in kind would become compulsory for employers from 6 April 2026. This will be a huge change, so prepare now and be ready! 


It will bring to an end the need for the submission of P11D forms. Accordingly, employers will have to report and apply income tax and Class 1A NIC on benefits in kind via payroll software from 6 April 2026. For more information on the changes, and what this could mean for you, click here.


What next?


Gravita’s payroll team can take care of the HMRC registration process and guide you through the information required to ensure your payroll is set up to payroll benefits. Our payroll experts have a deep knowledge of the UK tax system and are always up to date with the very latest technical expertise, meaning they can operate your payroll with ease.


Please contact our Gravita team for more information.

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