Desktop computer with the word payroll and money graphic on the screen
Payrolling arrangements for expenses and benefits in kind to go online

‘Informal’ payrolling of expenses and benefits in kind

Employers have previously been able to ‘informally’ payroll expenses and benefits in kind by agreement with HMRC.

However, from 6 April 2023 HMRC has confirmed that they will no longer be agreeing informal arrangements and instead employers will need to formalise their arrangements and register for HMRC's online service if they wish to continue payrolling benefits in kind and expenses for the 2023/24 tax year onwards.

Employers’ 2022/23 filing obligations

Employers who already have an informal agreement with HMRC to payroll benefits in kind and expenses for 2022/23 can continue to submit P11Ds marked ‘Payrolled’. However, for 2023/24 any informal agreement would need to be formalised as soon as possible.

Employers already payrolling benefits in kind

  • may have a Class 1A National Insurance contributions (NICs) liability and will still need to send a P11D(b) to tell HMRC how much Class 1A NICs is owed.
  • will need to give employees a letter explaining what benefits and expenses have been payrolled.
  • will also need to provide a P11D to HMRC for each employee in receipt of any benefits in kind that were not payrolled, with a copy provided to the relevant employee.

Employers who are not yet payrolling benefits in kind and expenses will need to register before 6 April 2023 in order to payroll these items for the 2023/24 tax year.

Filing forms P11D and P11D(b)

For those employers who do not yet payroll benefits in kind and expenses, the deadline for submitting 2022/23 P11D’s and P11D(b)’s is 6 July 2023. For late submissions, HMRC charge penalties on a monthly basis and issue penalty notices each quarter, until the necessary forms are filed.

From 2022/23 HMRC will no longer accept paper P11D and P11D(b) forms and are recommending that employers file using either:

To help employers submit online, HMRC are delivering webinars in May, June, and July 2023 on ‘Submitting forms P11D and P11D(b) online’.  Keep an eye on HMRC's expenses and benefits webinars for dates, or you can watch the webinar as a recording.   

If employers need to amend previously submitted forms P11D and P11D(b), from 6 April 2023 HMRC will no longer accept any paper amendments. Instead, they are launching a new online submission service to submit amended forms. They are expecting to provide more information on how to use this in the April edition of the Employer Bulletin.

 

This article reflects the position at the date of publication 14 March 2023. If you are reading this at a later date you are advised to check that that position has not changed in the time since. 

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