Employers - action needed!

13 December 2016

As part of the Government’s intentions to reform the treatment of benefits in kind, you need to be aware of the following changes which can be put in to action now. As the move seems to be towards payrolling all taxable benefits, it may pay you to make the changes now rather than later and reduce or remove your P11D reporting.

Currently you complete your P11D forms on an annual basis which can mean that reporting benefits in kind such as cars or medical insurance is effectively done in arrears with attendant ‘surprise’ tax bills for employees. You can now choose to payroll benefits in kind instead. This means that the correct amount of most benefits in kind can be put through the payroll for income tax purposes. For your employees this means that their tax affairs should be up to date, their PAYE code is correct and no more unexpected tax bills. For you as an employer, it means no more P11D forms and fewer changes to employees’ PAYE codes to process.

As with most HM Revenue & Customs procedures these days, you will need to register online to payroll benefits. This needs to be done before the start of the tax year, although we would recommend this is done before 21 December before HMRC start to issue 2017/18 PAYE codes

If you would like any assistance with the registration process or simply to know more about payrolling benefits, then please contact your MHA MacIntyre Hudson office.

Salary sacrifice

It was confirmed in the Autumn Statement that salary sacrifice schemes in respect of certain benefits would no longer be effective for tax and NIC purposes. However, the following benefits can continue to benefit from tax and NICs relief if provided through salary sacrifice;

  • Enhanced employer pension contributions to registered pension schemes (and pension advice).
  • Childcare benefits (employer-supported childcare and provision of workplace nurseries).
  • Cycles and cyclists' safety equipment provided under the cycle to work scheme.
  • Ultra-low emission cars.

The limitation will take effect for new schemes from April 2017 although arrangements in place before that date will be protected until April 2018 (cars, accommodation and school fees protected, until April 2021). You therefore need to take urgent steps to understand the impact on your monthly PAYE bill and make arrangements to unwind any existing schemes that will no longer be effective.

Should you have any questions or wish to implement one or both of the above changes then please contact your MHA MacIntyre Hudson office.

Contact us

If you would like further information on the topics discussed in the article please speak to your local MHA MacIntyre Hudson advisor or send enquiry.