From April 2016, employers in the UK have been able to register to payroll car and car fuel benefits, meaning that the tax on the benefit is paid by the employee through their PAYE code in-year and accounted for in real time by the employer, rather than a year in arrears via the P11D process.

Those employers who payroll car and fuel benefits are not required to report information about these benefits on forms P46 (Car) and P11D.

From 6th April 2018, for employers who have registered to payroll car and car fuel benefits, it is a mandatory requirement to report details of these benefits on the Full Payment Submission (FPS). The FPS includes the fields Benefits Taxed Via Payroll and Benefits Taxed Via Payroll YTD to report the values to HMRC.

The following other benefits may be voluntarily taxed within the payroll but employers must be registered with HM Revenue and Customs (HMRC) before the start of the tax year:

• Medical Plans
• Vans
• Sundries – except living accommodation and loans.

Check your version

You will need to be running version 2011.0.0.272 or higher. If your version is lower, please download and install the latest version.

There are separate instructions below depending on whether you have purchased the P11D module for Payroll or not. Please note that even if you have never processed or submitted P11D returns through the software, if you have purchased the P11D module, you should follow the "Using the P11D module" instructions. If in doubt, please check with your Account Manager or the helpdesk.

Setting up - Using the P11D Module

1. Add menu options and update constants
2. Copy benefits to the new tax year - for employees that already have benefits set up
3. Tax District Maintenance - selecting benefits to payroll
4. Adding benefits to employees
5. Set up accumulators
6. Set up BiK payment rules
7. Complete Benefit in Kind Payments setup screen

Setting up - Not using the P11D Module

You will not be able to generate the P11D(b) form in the program or submit this electronically if you do not have the P11D Module, but you can set up and deduct the BiK payment tax.

1. Adding Menu Options
2. Company Car Record
3. Set up accumulators
4. Set up BiK payment rules
5. Set up Benefit in Kind Payments Setup screen

Benefit in Kind Payments generation

Each pay period, before Run Payroll you will need to run the Benefit in Kind Payments generation as follows:

1. Click Payroll, double-click Temp. Data, double-click Bulk Input, then click Benefit in Kind Payments.
   If you have already run this routine, you will get the message, "Benefit in Kind Payments have already been generated".
2. The software will calculate the amounts automatically based on the outstanding benefit and number of periods left in the tax year. If you need to edit the an amount of BiK being taken this period, highlight the line showing the details and click Edit . You can then change the Amount This Period and click OK  to save the details.
3. The current benefits are displayed in a table. To print a report of these benefits (paybikNN.rpt), click Print 
4. To add the listed BiK payments to the temporary data, click OK  then OK.

Benefit in Kind Payments Deletion

If you have run the bulk input to add the BiK payments to your temporary data already and need to amend or delete any of them, you can run the Benefit in Kind Payments Deletion process as below, then run the Benefit in Kind Payments generation routine again.

1. Click Admin, double-click Payroll Administration, double-click Payroll Recovery, then click Benefit in Kind Payments Deletion.
   If you can't find this option, go to File, Navigate Menus and search for Benefit in Kind Payments Deletion, as the location may be different. You may need to log in as the SYSTEM user to see this option.
2. Click OK 
3. Click Yes on the prompt "Are you sure you wish to remove all Benefit in Kind Payments?"
4. Click OK.

You can now run the Benefit in Kind Payments generation routine again.

Payments exceeding the 50% tax limit

Current legislation says that no more than 50% of an employee's "applicable gross" can be deducted as tax in any one pay period. The applicable gross is the total of all taxable non-BiK payments, less any pre-tax pension contributions.

When processing BiK payments, the software calculates the 50% limit and then calculates the tax due on the applicable gross pay. If this exceeds the 50% limit, half the applicable gross is deducted in tax and no BiK payments are included. Anything over the 50% limit is carried forward as unpaid tax.

If the 50% limit is not reached, the BiK payments are added in payment rule number order and the tax due checked against the 50% limit. If the BiK would take the tax over the 50% limit, it is not applied (and no further BiKs are applied). As long as the 50% limit is not reached, the next BiK is applied.

If a BiK is not applied, the program will give a warning when running an Individual Payslip Preview (IPP) or a Payroll Preview, and also on the Exceptions report - BENEFIT NOT TAXED. The year to date accumulator is unchanged, and in the following pay period the remaining benefit is split between the remaining periods of the tax year.

Processing leavers with BiK payments

If you set an employee as a Future Leaver, for customers that have the P11D Module any BiK items that are date-driven (cars, vans, medical insurance, etc.) will have their end date set as the leaving date, and be recalculated up to the leaving date.
Customers that don't have the P11D Module will need to manually recalculate and adjust the Cash Equivalent values in the Company Car record screen.

The Benefit in Kind Payments generation screen will show the word Leaver in the Message column to indicate that the employee is leaving in this pay period.
As this is the employee's final payment, the program will not divide the outstanding amount by the remaining periods of the tax year, and instead will attempt to pay the remaining BiK in this period.

Normally, benefits cease to be available to employees on the leaving date, however, this is not always the case. If an employee will continue having a benefit after the leaving date, customers WITH the P11D Module will need to amend the End/Return date in the benefit details which will automatically adjust the Cash Equivalent value.
Customers WITHOUT the P11D Module will need to manually calculate and adjust the cash equivalent values.
The above also applies if an employee returns a company car early (before the end of the tax year).

An employee set as a Past Leaver cannot have any further BiK payments processed via payroll so the employee will not appear on the Benefit in Kind Payments generation screen. You should ensure the BiK payments have been accounted for before processing an employee as a past leaver.

BiK payments on Supplementary Pay Runs

BiK payments can be made on a supplementary pay run in the same way as on a main run. However, as supplementary pay runs only use temporary data, and running the Benefit in Kind Payments generation routine will generate BiK payments for ALL employees that have them set up, you may prefer not to include BiK payments on your supplementary runs.

To do this, simply skip the Benefits in Kind Payment generation step when processing the supplementary run. You will get a prompt when clicking Run Payroll that will say:

Payroll XX
Benefit in Kind Payments has not been generated.
Do you wish to continue.

If you click Yes to this, the payroll will run without the BiK payments being added.

If you do want the BiK payment to be generated for the employees you are paying on the supplementary run, you can run the Benefits in Kind Payment generation routine, then override the generated BiK figure to zero for the rest of the employees that you don't want to include in the supplementary run.

P11D and P11Db returns

HMRC require employees that have used BiK payments to have a P11D form submitted at the end of the year with no value for the payrolled benefit in question (assuming the BiK was paid in full). For example, if an employee's only benefit was a company car, and the tax due on it was paid in full during the year through a BiK, then they would have a blank P11D generated and submitted to HMRC.

Employees that have other non-payrolled benefits in addition to the ones covered by BiK payments will need a P11D that shows the non-payrolled benefits and blank amounts for the payrolled ones (assuming they were paid in full).

• If you have the P11D module for your software, it will generate the P11D for employees with BiK payments automatically as part of your normal P11D processing. You can electronically submit the P11D/P11D(b) as normal.
• If you do not have the P11D module, you will need to manually complete and submit P11D and P11D(b) outside of the software.

The P11D(b) submission will declare the amount of class 1A NIC due on all benefits (including payrolled ones) that attract it. HMRC will then expect the company to make payment as normal, as the class 1A NIC is not paid during the tax year on payrolled or P11D benefits.

[BCB:19:UK - Sales message :ECB]