Expenses and Benefits - Questionnaires of payrolling benefits

Written by Ian Congreave - Filed under: Expenses and Benefits on June 17th, 2009

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HMRC is continuing to gather information about the tax and NICs issues raised by the proposals to process the provision of benefits-in-kind through the payroll rather than by P11D/P9D reporting.

To learn about the experiences of employers who already use this method of taxing benefits under informal arrangements with their tax offices, HMRC has produced two questionnaires, one aimed at employers and another at agents and bureaux. HMRC provides assurances that the information collected will only be used for research, i.e. not for compliance purposes.

The questionnaires reveal many of the potential issues and problem areas with payrolling of benefits, such as:

expenses and benefits that are, and are not, taxed through the payroll, and why
whether some employee or employee groups are excluded, and why
situations where estimates of value have to be made
whether there is any special treatment for ex-pats
what is reported, if anything, at the year end
how Class 1 and 1A NICs are calculated and accounted for
how changes to benefits are handled if they occur early in the year, mid-year, or late in the year
whether any lower limit to take-home pay is operated
how employees entitled to P9D reporting are identified
how staffing levels would be affected if P9Ds/P11Ds were completed instead
how long it took to introduce payrolling initially
how much time is spent handling employee enquiries
what information is given to employees at the start of, during and at the end of the year, and when they leave
what information has been asked for by employees in connection with tax credit claims.