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The current process:
At the end of each tax year, your employer sends a declaration to HMRC called a P11d. This details the benefits provided to you throughout the tax year. HMRC then adjust your tax code to collect the tax due throughout the following year.
The new process:
Rather than your employer sending a P11d at the end of the tax year, the value of the benefit will, instead, be shown on your payslip.
You won’t receive more money in your bank, but you’ll be able to see the value of the benefit and the effect on the tax you pay.
There are advantages to using this system:-
– Your tax code will no longer be adjusted to account for tax due on benefits provided in the previous year.
– Tax is calculated in real time and is based on your salary, any commissions and bonuses, any deductions, and any benefits received. If, for example, your health care cover increases in July, this will be shown on your payslip and your tax adjusted in July.
– You will no longer receive a P11d* at the end of the tax year as all benefit information will be included in your P60.
– Adding your P11d information to your tax return (if applicable) will no longer be required.
Currently, beneficial loans and living accommodation cannot be added to payslips. These benefits will continue to be reported on P11d’s.