COMPLIANCE
EPG letter: the mandation of payrolling benefits in kind
CIPP sits on HM Revenue and Customs’ (HMRC’s) employment and payroll group (EPG), to represent the views of CIPP members and the wider payroll profession. Here, we share a letter from the group sent to Nigel Huddleston regarding the mandation of payrolling of benefits in kind (BiKs)
Rt. Hon, Nigel Huddleston MP Financial Secretary to the Treasury HM Treasury
1 Horse Guards Road London SW1A 2HQ
21 March 2024
Dear Minister
Mandatory payrolling of BiKs from April 2026 I am writing to you as the non-HMRC co-chair of the Employment and Payroll Group (EPG) 1 . The EPG is populated by senior level tax experts from professional bodies including the Institute of Chartered Accountants of Scotland (ICAS), the Institute of Chartered Accountants in England and Wales, the Chartered Institute of Taxation, the Chartered Institute of Payroll Professionals and the Association of Chartered Certified Accountants, as well as representatives from major sector and industry bodies around the UK and software houses. We work in a positive, respectful and collaborative way with HMRC income policy teams to achieve workable outcomes for employers and payroll businesses, as well as agents on all matters related to employment taxation. On 16 January 2024, the UK government announced 2 a number of measures under the banner of simplification, including the mandatory payrolling of BiKs from 6 April 2026. The EPG has already started to have what we anticipate will be regular meetings with the employment income policy (benefits and expenses) team at HMRC to collaborate and discuss all aspects of the changes to both the legislation and guidance, which will need to be brought in to facilitate the submission of BiKs information using the real time information (RTI) payroll platform. We believe that the timeline does not allow time for the necessary software to be developed and systems connected to allow all but the most straightforward benefits to be payrolled. We welcome this collaboration, although we are cognisant of the fact that 24 months (or around 450 working days) is not a long time to change a long-standing regime which ties together two aspects of employment taxation which are currently governed by separate legislative provisions within Part 3 of the Income Tax (Earnings and Pensions) Act (ITEPA) 2003 3 – the pay as you earn (PAYE) regime and the benefits code, as well as National Insurance legislation, including but not limited to, the Social Security Contributions and Benefits Act 1992 4 as amended and the National Insurance Contributions Act 2022 5 .
HMRC’s announcement states mandating BiKs payrolling will simplify the tax affairs of three million people and remove the need for four million end of year returns to be submitted. Whilst the EPG generally welcomes the changes, we are alive to the fact that this will be a
| Professional in Payroll, Pensions and Reward | May 2024 | Issue 100 24
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