Updated December 2020

Payrolling employee benefits

Take care when payrolling employee expenses

Recent years saw the introduction of optional payrolling of benefit and expenses by HMRC which, according the HMRC website, - allows you to payroll tax on benefits and expenses without having to submit a form P11D after the end of the tax year-

Whilst factually correct, you don't have to submit a P11D for an employee where all benefits and expenses are payrolled, the reality is that you still have to capture all the relevant employee P11D data so you can do the analysis necessary for the submission of the P11D(b) which must include figures for both payrolled and not payrolled expenses!

So, what have HMRC achieved by offering this option?

Simplified anything - NO.

Enabled their earlier collection of tax revenues on payrolled benefits and expenses - YES.

One possible benefit to the employee is that that their tax code reflects any payrolled elements and they are unlikely to face any additional tax charges at the end of the year. From the perspective of the employer however I can't see any benefit and moreover it adds yet more administrative work.

Why more work? Because you have to register for any benefits and expenses that you want to payroll - by the way you can't payroll them all as living accommodation and loans are not payrollable - and then you have to revise your payroll pay elements to reflect on the employee payslips.

For Liberty Accounts users things remain as easy as they have since 2009 when we first introduced our integrated P11D feature which allows you to detail transactions as being relevant for an employee's P11D as they happen rather than collating data at year-end.

So, the choice is yours but whether payrolling benefits and only having to report a P11D(b) or reporting a P11D for non-payrolled items Liberty Accounts handles it all.

Journal end flourish


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