Articles
2 February 2024
HMRC announced recently that they plan to remove P11D benefit reporting for tax from 6 April 2026 onwards and mandate the payrolling of benefits. This will shift the responsibility to correctly deduct the right BIK tax to the taxpayer via their payroll department. It appears a P11D(b) will still be required to pay the Class1A NIC.
This mandating of ‘payrolling of benefits’ is not yet law and so may be delayed or watered down, and if you wish we can lobby on your behalf. If, however, the change goes through you should start to plan for a transition to payrolling all BIKs.
By way of an example of lessons learnt by others, we came across one taxpayer who currently payrolls benefits, and they were unable to process corrections later in the year because the payroll, when initially set up, assumed there would be no need for negative numbers in some of the fields. There are likely to be other mantraps.
Potential implications for you:
1. Drivers who have a fuel card, currently have until 6 July following the tax year to make good the cost of all private use, to avoid a fuel BIK. Going forward, from 2026/27 they will only have until 1 June to make good. Giving you a month’s less time to collate any data you may need.
2. More generally, all benefits in kind would need to be known and put through the payroll (with correct NI treatment) on an ongoing basis and so the data flows for payroll will need to be reviewed and payslips redesigned.
We will advise you accordingly as we learn more but if you have any questions, please let us know.
Through Peter Moroz and John Messore, who sit on the CIOT and ICAEW Employment Taxes Sub-Committees, Innovation are in a position where we will be involved with any HMRC consultation. The main issue we hope to address is the June 1st deadline.
If you have any specific comments that you would like us to pass to HMRC please send us an email ISC@innovationllp.com.