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Payrolling Benefits in Kind


Until April 2016 the only way you could report company benefits such as company cars, dental cover and medical insurance was to submit P11Ds and a P11D(b) at the end of the tax year.

This process has always been a heavily manual and time-consuming, therefore expensive process. This also meant a lack of clarity for a lot of people as they were not taxed until the following year for benefits they received.

HMRC has since created an online service called Payrolling Benefits in Kind (PBIK), which has enabled companies to drastically improve the way benefits are reported, cutting down on a huge amount of processing time, and how employees are taxed on their benefits.

What is payrolling benefits?

Payrolling benefits is a system that allows an employee to be taxed on a month-by-month basis via the payroll within the year they actually receive the benefit, rather than having their personal tax allowance reduced the following tax year to pay the tax for the benefit received the year before.

What are the advantages of payrolling benefits?

  • It removes the need for P11Ds to be completed, which is a timely and expensive service.
  • It is calculated automatically via the payroll, reducing the chance of manual errors we can sometimes see on P11Ds.
  • Employees pay the benefit within the tax year they receive the benefit.
  • You can plan which benefits you wish to process this way.
  • The benefit’s value is visible on the employee’s payslip, giving clarity on what they are receiving.

Important information about payrolling benefits

  • The deadline to register for PBIK is 5 April 2023 for the 23/24 tax year. You can only apply before the tax year begins.
  • Benefits such as living accommodation cannot be processed as a payrolled benefit in kind.
  • You need to write to your employees to inform them of the change and what it means for them. This is something we can support you with.

With the deadline of 5 April 2023 fast approaching to register for PBIK, our Payroll Team can get you set up and started on payrolling benefits, and keep you on the right side of HMRC legislation. If you’d like to know more about how we can help you then please get in touch .

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