Payrolling Benefits in Kind

As an employer in the UK, it is your legal obligation to ensure the benefits and expenses which have been provided to your directors and employees throughout the tax year are reported and submitted to HMRC.

The most common way to formally report company-provided benefits such as company cars, health insurance and travel/entertainment expenses is via P11ds submitted at the end of the tax-year.

This is a manual and a time-consuming process. Through changes that came in seven years ago, companies now have the option to voluntarily use an HMRC online service named Payrolling Benefits in Kind (PBIK).

Using the payrolling benefits and expenses online service enables employers to show you’re collecting tax on benefits and expenses through your payroll, deducted in real-time, and paid directly to HMRC rather than filed annually the following year. 

Benefits you can payroll


Not all benefits in kind are treated in the same way by the tax system. Some aren’t taxed, but others are, and it can be hard to figure out where you stand. In its very simplest form, where a taxable benefit is processed through the payroll it removes the obligation for the annual declaration via the P11D.  

How to register for payrolling benefits and expenses 


To get started with Payrolling Benefits in Kind (PBIK) you need to register online with HMRC before 6 April, the start of the tax year you want to payroll for.

Using the online service for payrolling benefits and expenses means that you will not have to submit a form P11D. You must tell HMRC which benefits you want to payroll during the registration process.

The tax codes for all employees receiving these benefits will be amended unless you exclude any employees that you do not want to payroll benefits for in the online service.

NOTE: If you miss the registration deadline, you cannot payroll benefits until the following tax year.


Tell your employees


Once you have registered to payroll benefits, you must give your employees written notification explaining that you’re payrolling and what it means for them.  This communication must be sent to employees by 1st June after the end of the tax year.

Class 1A National Insurance contributions


You’ll still need to work out the Class 1A National Insurance contributions on the cash equivalent of the benefits (or relevant amount for OpRA) and fill in form P11D(b). The Class 1A National Insurance contributions liability applies if you’re payrolling the benefits or reporting to HMRC on form P11D.

You must keep a record of benefits you give throughout the tax year so that you can accurately report and submit your P11D(b) and the Class 1A National Insurance contributions payment. This must be done by 6 July after the end of the tax year. 

Get in touch

This is a service we can help you with, alongside looking after your payroll, for assistance, or if you have any questions, please do get in touch












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