Bookkeeping, Business Services, Business Tax, HMRC, Personal tax, Small Business

Pros and cons of automatic payrolling of benefits

By RJP LLP

Automatic payrolling of benefits is a new scheme being offered by HMRC which enhances the existing P11D system. Under the new scheme, tax due on employee benefits is deducted via PAYE from the employee’s monthly salary.

There are a number of pros and cons to automatic payrolling of benefits, and given that the scheme is currently still voluntary, companies should be aware of these and what is involved before deciding whether to register.

Advantages of automatic payrolling of benefits

For example, some of the benefits include

No need to complete forms P11D;
Reduced risk of penalties for inaccurate or late submission of forms P11D;
Greater certainty for employees because paying benefit tax in real time each month means they are more likely to be paying the correct amount of tax and will not have unexpected tax liabilities for benefits in kind.

However there are drawbacks companies should be aware of before registering with HMRC.

Detailed information about benefits payrolling

RJP’s partner Simon Paterson wrote about the new scheme in detail, how it works and the pros and cons for Fresh Business Thinking magazine. You can read what he advises companies here: article on automatic payrolling of benefits in Fresh Business Thinking.

Get more information about payroll, bookkeeping and accountancy services from RJP.

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