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HMRC internal manual

PAYE Manual

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HM Revenue & Customs
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PAYE service income, allowances, benefits and deductions: IABD: employment benefits

The table shows the type of benefits and identifies

  • If the information is from a form P9D or a form P11D
  • Which benefit makes up the Benefit in Kind (BIK) total figure used in coding
  • The amount is carried forward to be coded in CY+1
Item Carried Forward Part of Benefit in Kind (BIK) figure
     
Employment Benefit Fields    
Beneficial Loan YES NO
Car Benefit YES NO
Car Fuel Benefit YES NO
Medical Insurance YES NO
Non Cash benefit YES NO
Service Benefits YES NO
Taxable Expenses benefit YES NO
Telephone YES NO
Van Benefit YES NO
Van Fuel Benefit YES NO
Benefit in Kind Fields    
Accommodation YES YES
Assets YES YES
Asset Transfer NO YES
Educational Services YES YES
Employer Provided Professional Subscriptions YES YES
Employer Provided Service YES YES
Entertaining NO YES
Expenses YES YES
Income Tax Paid by Director YES YES
Mileage YES YES
Non-Qualifying Relocation Expenses NO YES
Nursery Places YES YES
Other Items YES YES
Payments on Employee’s Behalf YES YES
Personal Incidental Expenses YES YES
Qualifying Relocation Expenses NO YES
Travel and Subsistence NO YES
Vouchers and Credit Cards YES YES
Total Benefits in Kind YES  

 

The remainder of this guidance is set out as follows

 

Migration

At migration, if the COP tax code included benefits in kind in the main source record relating to a sub source employment, those details were migrated but recorded in IABD against the primary source. In your day to day work or if you need to review a 2008-09 underpayment, you need to check that the benefits are recorded against the correct employment and amend any to zero which are incorrectly recorded against the primary source.

Details of Expenses and Benefits are recorded in IABD from information received from ECS or from a P11D or form P46(Car) for the relevant year. P11D information will be taken into End of Year reconciliation for the year the P11D is relevant to. Coding forecasts will also update IABD, but will not be treated as the form P11D by End of Year reconciliation.

Only in exceptional circumstances should you record the receipt of a form P11D / P46(Car) in IABD without using ECS. In this circumstance only, use form type P11D(Manual) for the assessable year.

The Details screen is also populated with information received from ECS. The Details screen is read only.

Payrolling benefits and expenses

From 6th of April 2016 employers are able to tax benefits and expenses through their payroll.  They register this using the payrolling benefits and expenses online service.  If a benefit is payrolled the deduction is removed from IABD and the individuals tax code.

This means that a P11D does not need to be sent in for that benefit.  However if not all of the benefits are payrolled a P11d will still be required for the non payrolled benefits.

For more information above this process see PAYE58701.

Car Benefit and other P11D benefits

If you select the Edit Record icon for Car benefit you will be presented with the Employment Benefit Car Details screen. This is read only and displays

  • Employers PAYE Reference
  • Date car made available - if recorded on ECS
  • Date first registered - if recorded on ECS
  • Employee’s contribution - private use of the car
  • CO2 emissions
  • Current Year value - cash equivalent
  • Employers name
  • Date car withdrawn
  • Car value - list price plus accessories less employee’s capital contribution
  • Engine size - see table below
  • Fuel Type - see table below
  • Annual Coding car - if ticked the car details will be used in Annual Coding when calculating the CY+1 code

Engine size

Engine size displayed Engine size band
   
1 0 - 1400 cc
2 1401 - 2000 cc
3 2000+ cc

Fuel Type

Fuel Type Meaning
   
None  
B or G Bi fuel or Bio-Ethanol
C All other bi fuels
D Diesel
H Hybrid electric
L Low emission diesel
P Petrol

 

From April 2015 for the 2015-16 tax year onwards, the fuel types will be

 

Fuel Type Former Fuel Types Meaning
     
A B, C, E, H, G, P All except D
D D, L Diesel cars (all EURO standards)

 

Old fuel types will not be automatically updated, they will remain on the record until an update has been received via ECS from either a P46(Car) or P11D relevant to the 2011-12 year.

 

IABD will recognise for coding purposes the correct fuel type to use in 2011-12 where an old fuel type is displayed on the record.

Any updates from ECS will automatically create Contact History notes; these will be displayed on the Contact History Summary screen. When viewing these, depending on which form and when it was captured on ECS will depend on what is displayed.

For example

If viewing a P11D for years 2008-09 and earlier there will be three individual P11D Document Type entries. If the P11D contains a car benefit record there will also be a P46(Car) Document Type entry

  • P11D - 2009 (CY-1), 2010 (CY) and 2011 (CY+1)
  • P46(Car) - 2009 (CY-1)

For forms P11D received for the year 2009-10, there will be one P11D Document type entry and if it contains a car benefit, one P46(Car) Document Type entry.

The Document Type date on the entries for a 2009-10 P11D are

  • P11D - 2009-10 (CY-1)
  • P46(Car) - 2010-11 (CY)

If viewing a P46(Car) for the year 2009-10 or earlier there will be two P11D individual Document Type entries and one P46(Car) Document Type entry

  • P11D - 2010 (CY) and 2011 (CY+1)
  • P46(Car) - 2010-11 (CY)

For a P46(Car) received in 2010-11 there will be one P11D Document Type entry and one P46(Car) Document Type entry.

The Document Type date on the entries for a 2010-11 P46(Car) are

  • P11D - 2010-11 (CY)
  • P46(Car) - 2010-11 (CY)

Note: When viewing contact history and you want to determine whether you are viewing a car benefit from a P11D or a P46(Car) you must compare the Document Type date entries as referred to above.

If for any reason, you are unable to capture a P11D in ECS you will need to capture this on the PAYE Service. For all benefits you will need to

  • Select Form Type ‘P11D(MANUAL)’ from the Landing screen
  • Select the relevant Tax Year for the form P11D from the Landing screen
  • Date of Receipt of Form will default to today’s date
  • Select the Edit Record icon for Employment Benefits
  • Enter the assessable amount for the year the P11D relates

You must submit the year for which the P11D refers, guidance is included in action guide ‘IABD – ‘Change in financial circumstances’ available on the Personal Tax Operations Guidance Gateway.

  • When completing Contact History you will need to select the Document Type as ‘Other’ see PAYE105030

P11D(MANUAL) on the IABD landing screen should only be used when you are in receipt of an actual form P11D for the year. This is because reconciliation will use any benefit entries submitted under form type P11D.

Then you must decide if CY and / or CY+1 needs to be updated.

You can only record the assessable amounts for CY-1 from a P11D. To ensure you have the correct amounts recorded for CY and CY+1 you can use the ECS Car Benefit calculator to calculate the correct amount.

  • Select Form Type - ‘Other Form’ from the Landing screen

Note: By selecting ‘Other Form’ the system will not perform any End of Year Reconciliation until the actual form P11D is received for that year from ECS or a manual P11D is recorded in IABD.

  • Select the relevant Tax Year for CY and / or CY+1
  • Date of Receipt of Form will default to today’s date
  • Select the Edit Record icon for Employment Benefits
  • Enter the CY and / or CY+1 amount for the year
  • You must submit for each year for which the benefit refers, guidance is included in action guide ‘IABD – ‘Change in financial circumstances’ available on Personal Tax Operations Guidance Gateway

Employment view

You can view all benefits relating to a specific employer by

  • Choosing the relevant employer from the drop down box from the Employer PAYE Reference

    • The current employer details are displayed the first time you go into this screen

Note: If an update from ECS is received and there is no employment record held on the individual record, the benefit details submitted on the form P11D or P46(Car) will be recorded in IABD and the Employment Benefit Screen will display

  • Tax Year - as supplied from ECS
  • Employer name - as supplied from ECS
  • Employer reference - NONE

If an employment record is then created at a later date, the system will link the P11D / P46(Car) to the employment record.

In your day to day work you must also select NONE when reviewing all benefits for the year. If no employment exists for CY-1 or CY you should

  • Check e-Services Filestore for a P14
  • Create the employment following guidance at PAYE61052 and in action guide ‘Employment maintenance’ available on the Personal Tax Operations Guidance Gateway
  • Reduce the benefits recorded under NONE to zero
  • Record the benefits against the employment created

This will ensure the P11D details are included in the end of year reconciliation.

Note: Remember auto codes may not have been triggered from the ECS update as a work item has been issued instead. See PAYE12005 onwards for more information.

If you select the Edit Record icon, you will be presented with

  • Employment Benefit Details screen
  • This will display all details except car details
  • It is read only

Note: The amount of relief is the assessable amount for the relevant P11D year. If the benefit has been made good and the assessable benefit is nil this will also be displayed on the Employment Benefit screen.

In-year changes

Car and Fuel benefit

Any in-year changes to Car / Fuel benefit from a P46(Car) should be processed on ECS. ECS will update NPS IABD CY and CY+1 as necessary and auto code the benefit as appropriate.

If an individual has had more than one company car with the same employer in the same year and these have all been captured as form P46(Car) on ECS they can be viewed by

  • Selecting the [Previous] or [Next] button

Note: If a form P46(Car) which is a replacement car has been received on ECS the end date on the old car will not be displayed on the details screen until the receipt of the form P11D.

For any other in-year changes to the Benefits in Kind field, you should

  • Delete the New total BIK, this will enable the individual items field for you to make any amendments to the individual BIK entries
  • Delete the individual BIK items and replace with the new amount

Zero is a valid figure. When you are amending an amount of BIK to nil you must not just delete the entry but ensure zero (0) is entered.

Note: It is not sufficient to overtype the total BIK entry with a zero (0). To delete the current total BIK figure you need to select the total BIK field and delete the entry by using the delete key. Only then will you be presented with the update boxes.

You must not update the new amount to include a total BIK without the individual items which make up the total. If the individual items are not known you should check

  • ECS
  • Contact History

Or

  • Contact the individual

You should then save and submit any BIK entries you have made, if you cancel out before you have saved any entries made will be lost, see guidance include within action guide ‘IABD – ‘Change in financial circumstances’ available on the Personal Tax Operations Guidance Gateway.

All benefits

If you have received a telephone call / letter from a customer regarding incorrect benefits included in their CY tax code, you must update the customer’s record in IABD / ECS with the relevant details supplied by the customer. The IABD form type should reflect how the information from an individual or agent was received. For example, whether by form, letter, email or telephone call and must not be recorded as P11D(MANUAL). This is to avoid End of Year reconciliation being performed before the actual form P11D has been received.

Carry forward of benefits at Annual Coding

Employer displaying NONE on the Employments Benefit screen

If an employment ceased in CY-1 the employment benefits received from the P11D for that year were recorded and linked to the correct employer. The forecasts however for CY and CY+1 were not linked to an employment. These can be viewed from the Employer drop down on the Employment Benefits screen displayed as NONE and the employer name.

If the system could not match a P11D received for CY-1 to an employment, the employment benefits were recorded for CY-1, CY and CY+1 but were not linked to an employment and displayed NONE and the employer name from the Employer drop down on the Employment Benefits screen.

End of Year Reconciliation for CY-1 will include benefits when the employment ceased in CY-1 and work item 302 will be produced for the non matched cases. Work item 302 will not be created if the year has already been reconciled. In these cases the year will be re-reconciled and will include the unlinked P11D.

Annual Coding will not carry forward any of the employment benefits linked as NONE to CY+1. In your day to day work you should amend CY and CY+1 and reduce to zero.

Note: When reducing CY and CY+1 IABD values to zero, NPS will use the correct benefit amounts for the end of year reconciliation and coding processes, but the NONE employment source will not be removed from IABD until the following tax year.

Employment ceased in CY

Benefits which are linked to a ceased primary employment will not be carried forward at Annual Coding to CY+1 if there is no other live primary employment. If a new primary employment is created after Annual Coding you will need to update CY+1 and ensure the benefits are recorded against the correct employer.

If there is a ceased employment with linked benefits and a live primary employment, Annual Coding will carry forward the employment benefit from the ceased employment and link them to the live primary employment. If the live primary already has linked benefits, Annual Coding will carry forward these benefits to CY+1.

Section 336

A Section 336 is an employee’s claim for a deduction for expenses relating to their employment. To qualify the expense must be

  • One that each and every holder of that employment would have to incur
  • Necessarily incurred
  • Incurred in the performance of the duties of employment
  • Wholly and exclusively incurred
  • Actually paid

Note: This guidance is to be followed for PAYE customers and SA customers where the CY-1 tax return has not been received.

P11D and Section 336 claim received together

  • Capture the employers P11D on ECS
  • Do not capture the S336 claim on ECS

On the same day, make the following updates on NPS

P11D year

  • IABD, select form type ‘P11D (MANUAL)’
  • Record all benefits on IABD
  • Record the S336 expenses as Job Expenses
  • Update Contact History

CY / CY+1

  • IABD, select form type ‘Other’
  • Record forecast benefits on CY / CY+1

Record S336 expenses as Job Expenses ensuring that expenses are only recorded where they relate to a forecast benefit.

Note: If the S336 claim is against a non-forecast expense then do not include the associated expenses in CY or CY+1. Non-forecast expenses are

  • Assets transferred (P11D section A)
  • Entertainment (P11D section N)
  • Qualifying relocation expenses (P11D section J or M)
  • Non-qualifying relocation expenses (P11D section N)
  • Travel and subsistence (P11D section N)

It is important that the P11D and the S336 claim are dealt with on the same day. If not, an incorrect code could be issued through auto coding and incorrect figures will be included in End of Year Reconciliation.

Section 336 claim received after the P11D has been captured on ECS

  • Do not capture the S336 on ECS
  • Check the Employment Benefit Details screen in IABD, ensure you select the correct employer, P11D year, and benefit item

If the expenses incurred field is populated and the amount is equal to the S336 claim take no further action.

If the expenses incurred field is not populated, or the amount recorded is more or less than the S336 claim

P11D year

  • IABD, select form type ‘P11D (MANUAL)’
  • Record the S336 expenses as Job Expenses
  • Update Contact History

CY / CY+1

  • IABD select form type ‘Other’
  • Record the S336 expenses as Job Expenses ensuring that expenses are only recorded where they relate to a forecast benefit
  • Update Contact History

Note: See above for non-forecasted benefits for which you should not code an associated expense claim in CY or CY+1.

Section 336 claim received but P11D has not yet been received

  • Do not capture the S336 claim on ECS
  • Do not capture the S336 into IABD

Review ECS and e-Services Filestore and where the P11D has not yet been received, contact the customer and ask them to provide you with a copy of the P11D.

On receipt of the copy P11D

  • Do not capture the copy P11D into ECS

Make the following updates to NPS

P11D Year

  • IABD, select form type ‘P11D (MANUAL)’
  • Record all benefits from P11D on IABD
  • Record the S336 expenses as Job Expenses
  • Update Contact History

CY / CY+1

  • IABD, select form type ‘Other’
  • Record forecast benefits on CY / CY+1

Record S336 expenses as Job Expenses ensuring that expenses are only recorded where they relate to a forecast benefit.

Notes:

1. If the S336 claim is against a non forecast expense then do not include the associated expenses in CY or CY+1.
   
2. See above for non-forecasted benefits for which we should not code an associated expense claim in CY or CY+1.

Form P9D

You should record the receipt of a form P9D on ECS, see PAYE40046 and PAYE12035 and the Employment Income Manual (EIM20007), however the details should be captured in IABD. You will need to

  • Select Form Type ‘P9D’ from the Landing screen
  • Select the relevant Tax Year for the form P9D from the Landing screen
  • Date of Receipt of Form will default to today’s date
  • Select the Edit Record icon for Employment Benefits
  • Enter the amounts in the appropriate fields for the year the P9D relates

Note: 2015-16 is the last tax year the P9D can be used

Non cash benefit

The only exception when you need to record a benefit which is not received on a form P11D or P9D is non cash benefit which is received on a paper list from the employer. For more information see the Employment Income Manual (EIM15000 - 15429).

Note: You must not select Form Type as P11D (manual) as the information is not received on a P11D. To record the details you will need to

  • Access the IABD Landing screen
  • Select Form Type ‘Other’
  • Select the relevant Tax Year
  • Date of Receipt of Form will default to today’s date
  • Select the Edit Record icon for Employment Benefits
  • Enter the assessable amount for the non cash benefit