MEMBERSHIP INSIGHT
Voluntary payrolling
The CIPP’s policy and research team reveals the progress of this major change
S ince April 2016, employers have been able to process the cash equivalent value of benefits in kind (BIKs) through the payroll and collect income tax due on the BIKs via the pay as you earn (PAYE) process in real time. In turn, these employers’ annual reporting of the BIKs via the P11D return and the collection of any tax due by way of an adjustment to the tax code comes to an end. Whilst this doesn’t impact the collection of Class 1A National Insurance contributions (NICs), for many employers it offers – for the first time – a regulatory framework that provides additional flexibility for them in processing their tax reporting and collection duties. To be able to take full advantage of this option, employers needed to have registered their intentions to payroll using HM Revenue & Customs’ (HMRC’s) payrolling benefits in kind service (PBIKs) (http://bit.ly/1VNWlPP) before the tax year they intend to begin in. For 2016–17 that was 5 April 2016, and for 2017–18 that will be no later than 5 April 2017. Once the BIKs to be payrolled have been selected, a flag is set that ensures that any pre-tax year adjustments to the tax codes are cleared down to avoid the risk of double taxation. Employers can also elect to exclude an employee from payrolling via PBIKs.
Whilst registration can occur at any time up to 5 April, in order to minimise the number of tax code changes – specifically, P9 code notifications – the earlier in the year it is done the better. ...amazing 573 responses throughout September with 33% of respondents saying ‘yes’... The PBIK deployed to ‘live’ (as opposed to beta ‘test’) on 10 May 2016. HMRC’s project team are thrilled at how well, so far, the service has been received; though there have been modest numbers taking up the service there have been productive outcomes: ‘so far so good’. This matched the responses the policy team have received from delegates at National Forums and other events to our questions about whether they have elected to payroll and how it is going. Straw poll results suggest only small numbers so far, but with many positive success stories. A further question to delegates – who is planning to payroll BIKs next year? – resulted in a much more
positive show of hands and enthusiasm. Although a ‘show of hands’ is good, the policy team like a good quick poll question; so, as the new CIPP website launched, we ran a poll asking ‘Are you planning to take up voluntary payrolling of benefits for the 2017–18 tax year?’ We received an amazing 573 responses throughout September with 33% of respondents saying ‘yes’ they would be taking up voluntary payrolling next year. This matched the straw poll findings but prompted us to wonder about the remaining 67%? What is stopping the 35% who said ‘no’ they would not be, and the 32% who are still undecided? So we ran a survey, from 20 October until 5 November, which was promoted through NewsOnLine and supported by AccountingWeb and the Association of Accounting Technicians. Although a survey doesn’t have the value of a face to face discussion or a roundtable meeting, it provides the opportunity to gather statistics and to drill down into detail. The invaluable comments result in lessons for those who have yet to dip their toes into voluntary payrolling; namely, the opportunity to learn from the experiences of others who have gone first. The following comments are informative. ● “Staff have been positive about it; they
| Professional in Payroll, Pensions and Reward | December 2016/January 2017 | Issue 26 12
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