Employee Benefits – are you still completing P11Ds?

02 December 2021

As we come to the end of 2021 and move forward to the end of the 2021/22 tax year, we are coming up to the P11D reporting period for employee benefits. While P11Ds may be something you have completed for a number of years, it may be worthwhile moving to the Payrolling Benefits scheme from April 2022. This could help streamline and simplify your employee benefit reporting.

What is the Payrolling Benefits scheme?

This scheme gives employers the chance to process employee benefits through payroll month by month rather than submitting P11D forms in July after the end of the tax year. With this, employees pay tax on their actual benefit values in real time through payroll.

Although the requirement to complete P11Ds for payrolled benefits is removed, employers must still report the payrolled values on form P11D(b) by 6th July each year. This is used to calculate and pay the Class 1A National Insurance due as this is not payable through payroll on benefit values.

Benefits of the Payrolling Benefits scheme

Employers who have been using the payrolling benefits scheme for a number of years now have seen the main benefit being a reduction in admin time and costs to capture employee benefits for tax purposes. This comes as P11Ds, which can be a thankless task, can take a significant amount of time to prepare each year, depending on the software used to complete them.

Employees also see benefits from the scheme as their tax is calculated based on the actual benefit values processed through payroll and taken from their pay packet on a monthly basis along with their normal PAYE. This sees less confusing tax code adjustments which occur to collect tax due on benefits reported on P11Ds, as well as minimising the chance of underpayments.

If you think payrolling benefits could bring efficiencies to your business, it’s not too late to register for the 2022/23 tax year. Registration can be completed until 5th April 2022 using your online HMRC dashboard. HMRC are longer be accepting informal registrations, so to ensure P11Ds are not required for 2022/23, it is vital that formal registration is completed before 5th April.

If you require any assistance or would like any further information on payrolling benefits, please do not hesitate to contact Megan McDonald or your usual AAB contact.

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