FPS submissions for Real Time Information: These will be updated to allow comprehensive reporting of benefit-in- kind values and taxable expenses, which will determine the amounts subject to income tax and Class 1A NI in the relevant pay period. This includes for those with no earnings or for leavers. The note provides a list of fields that will be required in the software and broadly this mirrors the P11D boxes. The full list of data fields that will be required can be found in the annex to the technical note . Estimates and adjustments: Employers are expected to report reasonable estimates of values and adjust any previously understated values on a pay-period-by-pay- period basis during the year. Payslip reporting: There is no mandatory requirement to detail how benefits in kind should be reported
on employee payslips, but employers must provide an annual statement of benefits by 1st June following the end of each tax year. Employers may want payslips to include the details separately to avoid questions from employees. Penalties and interest: No penalties or interest will be charged for inaccuracies in the 2027/28 tax year, although late filing penalties will still apply. From 2028/29, both interest and penalties will be enforced. Exclusions: Mandatory payrolling will not apply to beneficial loans or taxable living accommodations. Employers will still be able to voluntarily
payroll these benefits through a separate registration service expected to open in November 2026 for the 2027/28 tax year. Tax deduction limits: The maximum amount 50% of their earnings. When adding in any benefit values, the limit is exceeded, the amount which could not be taxed needs to be carried forward to future pay periods within the same tax year. Reconciliation process: HMRC will conduct a reconciliation via the P800 process or Self- Assessment at the end of each tax year. Much as they do now. of tax that can be deducted from an employee’s salary remains capped at
The extension to April 2027 offers a valuable opportunity for employers to prepare for the mandatory payrolling of benefits in kind.
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ISSUE 12 GLOBAL PAYROLL MAGAZINE
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