28 February 2023

HMRC update: reporting expenses and payrolled benefits in kind

From 6 April 2023, HM Revenue and Customs (HMRC) will no longer accept new informal payrolling benefits arrangements. Additionally, starting on April 6, 2023, all P11D and P11D(b) forms must be submitted online. In the Employer Bulletin for February 2023, HMRC clarified how to report expenses and benefits for the tax year ending 5 April 2023.

For employers who utilise informal payrolling:

  • They must register now for payroll expenses and benefits for 2023/24.
  • If an informal agreement has already been reached with HMRC to pay payroll benefits for the 2022/23 tax year, it is permissible to continue submitting P11Ds labelled ‘payrolled.’
  • This agreement needs to be formalised as soon as possible.

For employers who haven’t yet paid employees’ benefits and payroll costs:

  • They can enrol in payroll benefits beginning on 6 April 2023. (deadline is 5 April 2023)
  • Because payrolling is faster and easier, there is no longer a need to submit a P11D for each employee who receives payroll benefits.

Payrolling benefits-in-kind (BIKs) for employers:

  • A Class 1A National Insurance contribution (NICs) liability may still be payable, in which case a P11D(b) must be sent to HMRC to inform them of the amount of employer Class 1A NICs owed.
  • A P11D will also be required to demonstrate any benefits paid that were not payrolled. Instead of providing employees with a P11D, a letter explaining what was payrolled will be required.

There is more information on how to tax employees’ compensation and benefits through payroll available here.

Employers who do not yet payroll BIKs:

  • There is a 6 July 2023 deadline for reporting any P11D costs and BIKs given during the 2022–2023 tax year.

Reporting expenses and benefits for 2022/23:

  • Before 6 July 2023, HMRC must receive a P11D and a P11D(b) for any paid BIKs to employees.
  • Until the return is filed, HMRC will charge monthly penalties and issue quarterly penalty notices.

From 6 April 2023, all P11D and P11D(b) forms must be reported online.:

  • HMRC will stop accepting paper P11D and P11D(b) forms starting with the 2022–23 reporting year.

Use of one of the following methods is advised by HMRC:

If a mistake is made and an amendment is required:

  • Paper amendments won’t be accepted after 6 April 2023. Instead, a new online submission link for the amended P11D and P11D(b) forms will be made available by HMRC.
  • Additional details on expenses and benefits for employers is also available.

If you have any concerns or queries relating to this matter or would like advice and assistance, please contact Alex Nicholl or your usual BM Connect adviser.

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