What is it?
PBIK was introduced in 2016 as an alternative to P11D’s as a means to tax employees on benefits provided by their employer. It is becoming increasingly popular, as employers look for new ways to recruit and retain staff in the currently very competitive job market, (where salary alone is often not enough?
How does it work?
Employees are taxed on their benefit each pay period via payroll, rather than using the end of year P11D method. The amount of the benefit is displayed on their payslip and they are subsequently taxed on this amount.
What are the advantages?
PBIK removes the need to complete exhaustive P11D forms at the end of every tax year, saving the company time and administration or additional accountancy fees if they are completed externally.
As employees are taxed on the benefit throughout the year, they will not owe HMRC at the end of the tax year, which is then normally recovered by a change in tax code/ lowered personal allowance.
Any disadvantages?
Not really! It is not ideal if benefit amounts are changed ‘in year’ too often. So for this reason, certain benefits such as Company Cars may be best submitted via P11D’s if they are going to be changed regularly.
What types of benefits can I payroll?
Most benefits can be payrolled with the exception of interest free or low interest employee loans and employer provided accommodation. The most popular being Private medical insurance and Company cars.
What do I need to do?
You need register for PBIK with HMRC using your Government Gateway account. It is important to note, that you need to register before the start of the tax year. So, for example, to use PBIL next year you will need to register by 5th April 2023 latest.
Find out more about PBIK by contacting Cornwall Payroll on 01872 306412 or emailing [email protected]