Payrolling Benefits In Kind
Legislation to require employers to report Benefits in Kind in real time as opposed to the end of year form P11D was included in the first Finance Act of 2015.
However, there are concerns amongst accountants that this should not be mandatory until 2017/18 at the earliest, as many employers are only just getting to grips with real time processing of basic wages and salary data.
The new system will require employers to calculate the cash equivalent of the Benefit in Kind and effectively spread it over the tax year. T
he tax due on benefits will then be collected by adding a notional value to the employee’s payroll, rather than reporting the Benefits in Kind separately on the end of year form P11D.
Please get in touch with us if you would like to use this system for 2016/17 as you will need to register with HMRC before 6 April 2016.
Collection of Tax through your Tax code
Remember that HM Revenue and Customs can collect tax debts by adjusting your Pay As You Earn (PAYE) tax code. HMRC refers to this as ‘coding out’.
The effect of this is to recover the tax debt from your pay or pension, by increasing the amount deducted during the tax year.
This applies if you have a debt with HMRC and are an employee paying through (PAYE) and / or received a taxable UK-based private pension.
This facility is available if your annual earnings are £30,000 or more. To do this, HMRC apply a sliding scale to your main PAYE income. The maximum amount that can be coded out is £17,000 where your earnings exceed £90,000 a year. These changes will only apply to underpaid Self-Assessment and Class 2 National Insurance debts and Tax Credit overpayments. Changes will then be reflected in your 2016/17 tax code.
Coding out the unpaid 2014/15 tax is only possible if you submitted your paper tax return by 31 October 2015 or file your tax return online by 30 December 2015.
If you would like your outstanding tax collected through PAYE please ensure that we receive your tax information in good time to meet the 30 December deadline!