Many employers offer benefits to their employees, either as part of standard reward packages or through flexible reward choice programmes using Salary Sacrifice or other Optional Remuneration Arrangements (OpRA). These benefits may have Tax, Class 1 NICs and Class 1A implications and require P11D and P11Db reporting. These arrangements have evolved over time and some of them have been informal or non-standard. However, informal P11D and payrolling arrangements are no longer acceptable. The December 2023 Employer Bulletin reminds employers to prepare:
- No more informal payrolling: If you have been using an informal arrangement, you must register now to payroll your benefits. HMRC will only allow new informal arrangements in exceptional cases.
- Register for payrolling benefits for 2024 to 2025: You can register now to payroll your benefits from 6th April 2024. By using the online service for payrolling benefits and expenses, you can avoid submitting a form P11D. You must tell HMRC which benefits you want to payroll during the registration process. The tax codes for all employees receiving these benefits will be changed unless you exclude any employees that you do not want to payroll benefits for in the online service.
Plan ahead for payrolling benefits If you have not registered and implemented payrolling yet, and you have existing informal arrangements that need to end, or you want to introduce payrolling, you need to plan ahead and take the necessary steps to make the change, such as: project and payroll software budget, communication plan to inform employees, check with your software or payroll service what is needed to transition or introduce the change, and put action into progress – remembering that registration is open now for the 2024/2025 tax year. You cannot payroll for 2023/2024, as the deadline to register for the current year was 5th April 2023 – you are too late.
So, as part of your New Year resolutions, set a goal to explore and implement payrolling.
If you are interested in discussing this further, please use the form below.
