Employers seeking to payroll benefits in kind for the tax year 2019/20 should apply to do so by 5 April 2019. Application is through the HMRC website.
One advantage of using the online service for payrolling benefits is that it eliminates the need to prepare and submit P11Ds although P11D(b) forms will need to be submitted to pay over Class 1A National Insurance.
Unless HMRC considers there is a valid excuse, a missed deadline means that benefits cannot be ‘payrolled’ until the 2020/21 tax year, providing an application is made by 5 April 2020.
What benefits can be payrolled?
All benefits can be payrolled with two exceptions – living accommodation provided by the employer and interest free or low interest loans.
It is your obligation as an employer to inform your employees that you are payrolling benefits and explain what it means for them. They should be told about:
- benefits being payrolled and those not being payrolled
- the cash equivalent of each benefit in kind (BIK) – this should be the same amount as would be reported on a P11D
Salary sacrifice arrangements
For any non-cash benefits, you need to work out the value of the benefit.
If you set up a new salary sacrifice arrangement, you’ll need to work out the value of a non-cash benefit by using the higher of the:
- amount of salary given up
- earnings charge under the normal benefit in kind rules
For cars with CO2 emissions of no more than 75g/km, you should always use the earnings charge under the normal benefit in kind rules.
Extra care should be taken when calculating the taxable amount for employees, particularly where an employee leaves the business or changes a company car part-way through the tax year.
How Curo can help your business
We are able to assist with all aspects of employment and employee taxation, including our payroll offering. The rules around employer taxation change frequently and penalties can be strict for non-compliance, so we urge businesses to take advice from experienced professionals when considering this area.
Please contact [email protected] to discuss your employer taxation requirements or if there you are interested in an employer healthcheck.