Behind the headlines: HMRC’s latest Employer Bulletin and payrolling benefits
Issue 65 of the Employer Bulletin was published on 11th April. The Bulletin is the main conduit of information for employers even though it’s only published six times a year. If you don’t normally receive it direct to your inbox, sign up here.
Since the last Bulletin in February we’ve had a Budget and the start of a new tax year, so there was plenty for HMRC to cover. Read on to find out more about what this means for payrolling benefits – the first focus of this series of blogs.
We’re now approaching the first P11D deadline on the 6th July since the start of the statutory approach to payrolling benefits was introduced on 6th April 2016. Employers who registered before the 16/17 tax year started no longer need to complete a P11D for any benefits that have already been taxed through the payroll. If all benefits have been payrolled the employee will not receive a P11D at all, if only some benefits have been payrolled then the remainder are still reported on the P11D and will be coded out. With the introduction of dynamic coding (also referred to in the Bulletin and a separate blog in this series) employees will see more significant and earlier tax code changes in response to a P11D, as well as when other information is reported, to recover as much tax as possible subject to the 50% regulatory limit, by the end of the 17/18 tax year.
As the P11D(b) now needs to be a return combining Class 1A from benefits that have been payrolled, as well as from any remaining P11Ds, employers need to ensure that the total reported is a combination of the two i.e. the P11D(b) will not necessarily balance just to the Class 1A on the forms submitted. For this reason, HMRC no longer pre-populate the form with the total if the P11Ds have been compiled via the online P11D service.
However, this sentence in the Bulletin is incorrect ‘Instead of giving your employees a P11D, you need to give them a letter explaining what you’ve payrolled’. The legislative requirement is to inform employees by 31st May annually of the value and type of benefits that have been payrolled. This can be done by a letter, but many employers (for ease) print this on every payslip, so negating the need for a ‘benefits only additional P60’.