Changes to company car benefits – are you ready?
From April 6, 2018 there will be a change to the way company car benefits are payrolled, improving the process for both the employee and employer.
From the new tax year, if you choose to payroll company cars, the car information must be submitted via payroll and tax will be collected in real time through a monthly deduction.
The new streamlined process will reduce the number of tax calculation errors, eliminating the chance that employees will be landed with a big underpayment bill. The changes are easier for employees to understand as the tax code will remain at the personal allowance, presuming the employee has no other adjustments.
There’s benefits for employers too as P11Ds and P46 cars will no longer be required, reducing the amount of paperwork and saving valuable time.
Form P11D(b) is still required to report class 1A National Insurance due and companies need to provide the employee with a summary of the benefits payrolled, the cash equivalent as well as details of any benefits not payrolled, before June 1 every year.
The change means that all benefits apart from beneficial loans and employer provided living accommodation, can be processed through payroll.
If employers wish to payroll benefits in the 2018/19 tax year, they will need to act fast and register prior to the start of the tax year. If you use payroll software, then most platforms are ready for the change.
Although the payrolling of benefits is still voluntary, HMRC are moving to real time, so we predict that this will become mandatory in the near future.
After successfully completing payrolling benefits with a client, we are looking to roll it out to other businesses ahead of the implementation date. If you would like Pierce to help you with the changes, contact Lisa Kennery on 01254 688 110 or email firstname.lastname@example.org.
**Lisa Kennery is the payroll manager at Pierce. **