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HMRC internal manual

National Insurance Manual

Class 1A National Insurance contributions: Calculating Class 1A NICs: Employers who payroll benefits

Under informal arrangements, HMRC will, in certain circumstances, consider and accept requests to include benefits in gross pay for PAYE income tax. This is often referred to as payrolling benefits. Work on a more formal structure to underpin these arrangements continues.

Regulation 85 of the Income Tax (PAYE) Regulations 2003 (SI 2003 No 2682)Payrolling benefits does not remove an employer’s obligation to submit forms P11D. If an employer makes a request to payroll benefits, they must set out how they plan to provide details of the value of the benefit to HMRC and employees. If the employer finds it administratively convenient to provide the information in list form, HMRC can give permission to do this. The list must provide details of the full range of expenses and benefits that would otherwise have been submitted on forms P11D.

Where the local tax office has agreed that employers do not have to use form P11Ds, employers must

  • identify the benefits on which Class 1A NICs are due
  • complete form P11D(b), using the adjustment facility where necessary to arrive at the correct amount of Class 1A NICs due.