Are you ready for the next payroll deadline?

Deadline heads-up

As an employer 6 July should be marked as a key date in your calendar. It’s the deadline for reporting benefits-in-kind on P11Ds, P11D(b), employment-related shares provided to employees or directors, and employee termination packages which include non-cash benefits.

P11Ds and P11D(b)

Taxable benefits provided to employees and directors, which are not covered by a PAYE settlement agreement or formally payrolled, must be declared on aForm P11D..Directors and employees can avoid a taxable benefit if they make good non-payrolled benefits, i.e. they pay the employer for the taxable value of the benefit. Paper forms are no longer allowed. For 2023/24, P11Ds must be submitted digitally to HMRC by 6 July 2024.

Don’t forget the P11D(b)

The job of reporting benefits is not done until you submit theForm P11D(b) which states the Class 1A NI payable on all taxable benefits including any which have been payrolled. If you’re late you’ll be fined £100 for each month (or part month) for every 50 employees you have. Like P11Ds, theP11D(b) must be submitted online. If you didn’t provide benefits in 2023/24 but HMRC sends you a Form P11D(b) or P11D(b) reminder, you must submit a ni lP11D(b) return.

The future of P11Ds

Early in 2024 HMRC announced that in 2026 employers will be required to payroll benefits in kind, i.e. tax them through PAYE. The good news is that P11Ds will become a thing of the past. The bad news is that you’ll need to get to grips with a new system (unless you already use payrolling) and make sure that your payroll software can cope.

Employee share schemes

If in 2023/24 one or more of your employees (including directors), or someone connected to them, has acquired or been given an option to acquire shares in your company at a reduced price because of their employment with you, you must report this by 6 July 2024. A report is also required to certify that any new tax-advantaged share plans meet the relevant conditions. Before you can make a report you must be registered with HMRC. This can take a couple of weeks so allow enough time to ensure you don’t miss the deadline.

Termination packages

For employee termination settlements in excess of £30,000, unless made wholly in cash, i.e. they include non-cash benefits such as a transfer of an asset, you must send a report to HMRC (and give a copy to the former employee). There’s no set format for the report but it must include certain information.