16th February 2021
Payrolling benefits is the process that allows an employee to pay tax on a month by month basis, through the salary they earn, in the tax year that they received the benefit.
Employers who are intending to payroll benefits and expenses must register their intention to do so with HMRC using the payrolling employees taxable benefits and expenses service, before the start of the tax year (5 April 2021).
The online service for payrolling benefits and expenses means employers do not have to submit form P11D. Employers need to inform HMRC which benefits they wish to payroll during the registration process.
The tax codes for all employees receiving these benefits will be amended, unless the P11D at the end of the year is marked ‘payrolled’. This stops HMRC from collecting tax that has already been deducted from the employees.
If employers miss the registration deadline, they cannot payroll benefits until the following tax year or adopt any other informal arrangements whereby tax is deducted via the payroll.