Don't miss the benefit-in-kind payrolling deadline
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.
Related Topics
-
Selling spare items to your company
You’re short of cash but if you use the traditional methods to take more money out of your company you’ll pay higher rate taxes. Is there another way to extract profits without paying income tax or NI?
-
No such thing as a (tax) free lunch?
You run a small consultancy company and treat your staff to lunch in the office once a week. Your bookkeeper says it’s a taxable benefit in kind because staff lunches are only exempt if they are provided in a workplace canteen. Is this correct?
-
Judge criticises use of fabricated AI-generated cases in HMRC appeal
A tax tribunal judge has criticised the use of apparently fabricated case references generated by artificial intelligence in an appeal against HMRC. The incident highlights growing concerns over the use of AI tools in legal and tax proceedings. What happened?