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Forms P11D and P11D(b): These forms will be temporarily retained for reporting beneficial loans and living accommodations. HMRC is also considering retaining them for specific scenarios, for example, globally mobile employees that are part of modified PAYE arrangements commonly referred to as EP Appendix 6 and Appendix 7A. Implications for Employers The extension to April 2027 offers a valuable opportunity for employers to prepare for the mandatory payrolling of benefits in kind. Employers should use this extension wisely as this will be a significant change. If they haven’t already started, they need to start planning now, considering: Avoiding under- and over-reporting: Reviewing current benefit reporting to ensure accuracy. Over-
reporting may involve including benefits on P11Ds that are exempt or considered trivial by HMRC, potentially allowing for repayment opportunities. Benefit charges: Assess benefits where employees can make good to avoid a benefit charge, ensuring that the making good occurs within the allowed time limits, particularly for benefits like private fuel. PAYE settlement agreement (PSA): Ensuring a PSA is in place by 6th July or before. This agreement with HMRC allows employers to cover the employee’s tax and NIC on taxable expenses or benefits directly. For non-exempt benefits and expenses, a PSA is necessary to avoid declaring them on P11Ds or taxing them through payroll. Accuracy in reporting:
Class 1 NIC instead of Class 1A NIC. Location of benefit information: Benefit details are often stored across various systems, managed by different individuals, including external providers. Consider the changes needed to gather this information on a pay period basis. This might also include revising benefit windows where changes will be allowed in future, the contracts with benefit providers or the provision of benefit by connected businesses in the UK or overseas. Payroll and/or benefit software: Review the software requirements or changes needed and identify who will provide these. Early discussions are recommended.
Determine how to correctly identify benefits subject to
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GLOBAL PAYROLL MAGAZINE ISSUE 12
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