Don't miss the benefit-in-kind payrolling deadline

N.TRUST Newsdesk, 03 March 2021

If an employer provides its employees with benefits-in-kind, it can choose to "payroll" these so the employees can spread the payment of any tax. However, there is a strict deadline to meet to do this. What is it?

Payrolling recap

Employers can do away with the chore of reporting most types of benefit in kind on Form P11D by payrolling them instead. This involves employees paying tax on their benefits through PAYE deductions. As their employer they still need to submit a P11D(b) for any Class 1A NI they owe on the benefits to which payrolling applies.

Prepare for 2021/22

If an employer wants to use benefit payrolling for the first time they must register with HMRC before the start of the tax year for which they want to use it.

To use payrolling for the first time for the 2021/22 tax year, an employer has until 5 April 2021 to complete the registration via HMRC's registration site.

Warning! End to informal payrolling

If the employer uses their own system for payrolling benefits, they will need to register with HMRC before the deadline to use its formal scheme or stop payrolling benefits altogether. HMRC won’t accept informal arrangements for 2021/22 and later years.

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