Revenue reveals payrolling BIKs draft guidance

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HMRC has published draft guidance on provisions for payrolling certain benefits in kind (BIKs) from 6 April.

From the start of the tax year 2016 to 2017 you can choose to account for the tax on the benefits you provide to your employees through PAYE each payday.

According to the guidance employers must register before 6 April to start payrolling for 2016/17.

In later years employers changing over to payrolling must register before the start of the tax year.

Registering with HMRC allows employers to payroll tax on certain BIKs without having to submit forms P11D after the end of the tax year.

If you miss the registration deadline, you can’t payroll benefits for tax year 2016 to 2017, but if you have a valid reason, HMRC may agree that you can informally payroll, but you must still complete form P11D at the end of the tax year and mark each P11D ‘Payrolled’.

The reporting requirements and payment of Class 1A NICs on benefits remain unchanged.

Employers can payroll all benefits apart from:

  • vouchers and credit tokens
  • employer-provided living accommodation
  • interest free and low interest (beneficial) loans

These benefits must be reported via form P11D even if other benefits for the same employee are being payrolled.


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11th Feb 2016 15:34

What if...

The BIK, say medical insurance is paid annually on 30 September.  The payment on 30 September 2015 will go on the 2015-16 P11d and we don't know what the September 2016 payment will be yet.  So what do we actually 'payroll' for the first half of 2016-17?

The guidance covers in year changes, but remains silent on the transition from a 'cash payment' basis to 'accruals/actual'.

The logical answer would be to use the 2015 payment figure for six months, then rework the figures using the 2016 figure when known to spread the 2016 figure over twelve months, and then putting in a catch up amount in October for the arrears for the first six months.

Not sure who benefits from this.  As most benefits are coded, and given the right software, P11ds look to be an easier option as we still have to do a P11d(b) to account for the Class 1a.

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