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Title
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Contents
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Introduction
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An introduction to the draft guidance and legislation.
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Who should read this
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Basically, anyone that is involved with taxable expenses and benefits in kind. Perhaps, the guidance could have referred to the vital role that bookkeepers, agents and accountants will play and how the move is likely to impact this population the most
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The default operation of mandatory payrolling
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Essentially, the real time taxation of expenses and benefits plus the calculation of Class 1A National Insurance
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Reporting requirements
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As we know, the P11D is going apart from employer-provided accommodation and beneficial loans. So the only route will be to declare the taxable expenses and benefits in real time via the Full Payment Submission (FPS)
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Getting ready for mandatory payrolling of benefits in kind
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Probably, the most important section. HRC’s guidance says that their points need to be considered ‘at least a year before the April 2027 introduction’. ICB agrees
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How to report a benefit in kind in real time
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A long section which can be summarised – ‘you need to put the taxable value through the payroll and declare it on the FPS’
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What happens when the full amount of tax cannot be collected either within a pay period or tax year
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This is a section that will need to be expanded as there will be justifiable reason why expenses and benefits cannot be processed in real time. Possibly, we are not aware of them at all. There was talk about an ‘end of year’ process whereby the taxable value could be declared outside the normal payroll frequency
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Reporting Class 1A National Insurance contributions
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A message for clients is that Class 1A National Insurance will be accrued in real-time and payable with the monthly PAYE remittance. The liability is moving from an annual one to a monthly one
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Dealing with employees who leave during the tax year
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This section talks about a ‘BiKs update process’ i.e. updating HMRC’s systems via an additional FPS where expenses and benefits cannot be payrolled. However, it is under this section that deals with leavers so, perhaps, the ‘P11D by payroll’ option is no longer going to be available for errors and only for employees who leave in the year
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Penalties and interest
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For 2027/28, the first year of operation, there will not be penalties for failing to process in real time. They will apply from 2028/29
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Moving employees from one payroll to another
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This section refers to Gov.UK guidance and contains nothing new. However, it is a reality that employees move from one payroll to another, probably due to a PAYE scheme mergers, successions or transfers
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Payment reference numbers, P60s and P45s
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Perhaps one of the last sections to be read as there is no new information here
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Future updates and timeline of delivery
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A long timeline of how this will progress in terms of the legislation and further guidance. ICB notes the voluntary PBiKs registration service will close on 05 April 2026. Hopefully, this will be after 10pm on this day as this is the deadline for registering to voluntarily payroll for tax year 2026/27
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What to do if you have questions or concerns
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This says that HMRC will work with employers and stakeholders ahead of mandation. A contact E-Mail is address is quoted and HMRC will ‘consider’ the comments made but will not reply to them!
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Annex 1 – payrolling examples for different scenarios
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This gives examples of SOME benefits, probably not the ones that are most common. It does go into a lot of detail about payrolling the benefit for ‘classic cars’ (not common) and accommodation and beneficial loans (which are not being mandated from 2027)
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Annex 2 – draft legislation
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This section details when legislation will be in place
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Annex 3 – additional benefits in kind fields likely to be required on Full Payment Submission returns
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For software developers largely. But, of note is that fact that all fields on the P11D will now be included in payroll software for reporting via the FPS. Depending on the taxable expenses and benefits the client has, this is massive additional reporting. Basically, if it was reported on the P11D it will have to be reported via payroll from April 2027
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