Guidance

Payrolling employees: taxable benefits and expenses

Use the payrolling benefits and expenses online service to show you’re collecting tax on benefits and expenses through your payroll.

Online service

If you choose to payroll you can tell HMRC online. You need to register online before the start of the tax year you want to payroll for.

You must add the cash equivalent of the employees’ benefits to their pay and then tax them through your payroll.

HMRC will make sure the value of the benefit is not included in your employees’ tax codes.

If you use the service you:

  • will not need to use form P11D
  • still need to work out the Class 1A National Insurance contributions on benefits and complete form P11D(b)

You can exclude employees from payrolling once you’re registered, but you’ll need to send a P11D to declare the non-payrolled benefits.

Once the tax year has started you’ll have to payroll the benefits for the whole of the tax year, or until you stop providing them.

Before you start

Contact your accounting software provider to make sure your software can collect the correct tax due on the registered benefits directly from your employees’ pay.

If you use Basic PAYE Tools you can now use this service. You still need to register by 5 April.

To use this service you need a Government Gateway user ID and password to enrol for PAYE online.

Service availability

7am to 10pm, Monday to Friday
8am to 8pm, Saturday and Sunday

HMRC services may be slow during busy times. Check if there are any problems with this service.

Other ways to apply

Informal payrolling

If you do not register to use the online service by the start of the tax year, you’ll need to agree with HMRC that you can payroll informally for that year. To do this write to HMRC at:

Complex Caseworker Team
National Insurance Contributions and Employer Office
HMRC
BX9 1BX

If you payroll informally you must still complete form P11D at the end of the tax year.

Submitting electronic P11Ds

You’ll need to tell HMRC in advance that you are sending electronic P11Ds using the PAYE - notification of payrolled benefits form.

You can only submit electronic P11Ds if all benefits and expenses have gone through your payroll.

Submitting paper P11Ds

You need to mark each individual paper P11D ‘PAYROLLED’. If you do not write ‘PAYROLLED’ on them, the P11Ds you submit may be processed and your employees could be taxed twice on their benefits.

Further information

Read more about payrolling: tax employees’ benefits and expenses through your payroll.

Published 12 June 2014
Last updated 18 August 2017 + show all updates
  1. The address in the section on other ways to apply has been updated.
  2. HMRC's Basic PAYE Tools can now support the payrolling benefits online service.
  3. Welsh translation added.
  4. Link to further guidance on payrolling benefits in kind added.
  5. Guidance on using the new Payrolling Benefits in Kind service has been amended following feedback from users.
  6. Register now to use the new Payrolling Benefits in Kind online service. From 6 April 2016 you'll need to use this service if you want to payroll your expenses and benefits. You'll have to register for the new service by 5 April 2016 and you'll no longer have to submit P11Ds for your employees. This service replaces the current informal payrolling process.
  7. First published.