Taxable benefits, commonly known as ‘Benefits in Kind’ are expenses and benefits provided to employees by their employers.
Most BIK’s (Benefits in Kind) need to be reported to HMRC, unless there are specific exemptions. These BIKs include the likes of company cars, private health insurance e.g., medical, or dental, payments or reimbursements where private/personal expenses are paid for employees, gym memberships, gifts/vouchers (that exceed the £50 ‘trivial’ limit) and many other offerings as per HMRC’s consideration of what constitutes a taxable benefit.
Further information regarding commonly recognised expenses and benefits can be found using the following HMRC link: https://www.gov.uk/expenses-and-benefits-a-to-z
The rules on how these items are declared and taxed differ depending on the employer’s arrangement with HMRC. If the employer is formally registered to payroll benefits, these items can be declared each period within the payroll. Where an employer is not registered to payroll benefits, the items must be declared at the end of the tax year on forms P11D (after 6th April but no later than 6th July deadline).
To payroll benefits, the employer must register with HMRC for each type of BIK they wish to offer and subsequently capture within the payroll. The registration is done via the Employers Online HMRC Gateway Account and needs completing before 5th April each year before the new tax year commences.
Registering with HMRC enables employees to settle the employee tax owed in real time each month via their payslip, and thus removes the requirement of form P11D that calculates the annual tax value owed at the end of the tax year. From this, the employer will have an annual P11D(B) only submission. Please note, regardless of any scenario, the P11D(B) will always be an annual submission for the employers Class 1A National Insurance liability.
