Payrolling of Benefits in Kind (PBIK)

Register now to use the Payrolling Benefits in Kind online service if you want to start or continue payrolling in the 2017/18 tax year.

 Measures aimed at simplifying the administration of Benefits in Kind (BIK) and expenses, including the payrolling of benefits came into effect on 6 April 2016. After success and positive feedback from the first year of payrolling benefits, more and more companies are looking to commence the process for the 2017/18 tax year.

Payrolling means putting a value through payroll to collect tax on employer-provided benefits and expenses.  For many years, employers have been able to agree with HMRC to use this mechanism informally on a case-by-case basis.

In practice it did not remove P11D reporting from employers, but did mean that employees were not accruing a tax charge on benefits which were required to be collected later through a reduction in the personal allowance using an amended code. However, collection of tax due on benefits will only be coded where less than £3,000 is owed; anything more needs be settled by the employee.

From 6 April 2016 employers no longer needed to submit P11Ds after the end of the tax year for the BIKs they choose to payroll. They can payroll all benefits except for living accommodation, beneficial loans and credit vouchers and tokens.  If you’ve previously been payrolling these benefits informally you can continue to do so but you must still report them on a P11D.

Before using the PBIK service you’ll need to register by 5 April 2017. You won’t be able to register after this date for the 2016/17 tax year as HMRC can’t process changes in-year.  If you don’t register the benefits and expenses you intend to payroll you’ll have to report them on a P11D.

All payrolled benefits and expenses need to be included when you report your payroll information in a Full Payment Submission. P11D (b) forms must still be completed, including the total benefits and expenses provided, whether or not they’ve been put through your payroll.

If you payroll car and car fuel benefit you won’t complete P46 (Car) forms as you’re deducting the tax due on these benefits at source. If you use a contracted out company car provider you must notify them of your decision to payroll and ensure they don’t submit P46 (Car) forms for payrolled benefits.

Registration is done through the Government Gateway.  Agents can’t directly access the service on behalf of clients.

Action Points (before 5 April 2017):

  1. Consider whether you want to participate in having benefits and expenses processed through the payroll
  2. Speak to your payroll provider for further information to ensure they are able to payroll the benefits
  3. Register with HMRC
  4. Notify employees of the changes

If you would like to discuss your options and the implications please do not hesitate to contact me.

Bobby Battu, Payroll Manager

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