Benefits in Kind Shakeup for 2016

Two major shake ups of the benefits-in-kind (BIK) system are due to hit companies from 6th April 2016.

HMRC have announced the abolition of the £8,500 threshold and new rulings that will allow employers to tax the majority of employees BIK through their payroll systems rather than through employee’s tax codes. Included in this will be medical insurance and company car’s, however there may be some exemptions for loans and vouchers.

Currently employers are required to submit form P11D detailing any BIK for employees who earn more than £8,500 per annum and like wise form P9D for those that earn less than £8,500. By abolishing the £8,500 threshold all employees will be required to pay BIK tax regardless of their annual earnings.

A new online Payrolling Benefits in Kind (PBIK) service will be available and replaces the form P11D with the hope the administrative burden currently faced by many companies will be reduced.

These changes come into full effect from 6^th April 2016. HMRC are advising that all companies, even those who currently payroll  BIK expenses, register for the PBIK service before the 21^st December 2015.

Registering now allows you to check that your existing payroll software aligns with the new service,  it will also reduce the risk of being over taxed when the scheme comes into effect.

If you are unsure as to which benefits are included and what you need to report, our tax specialists are on hand to help.

Call us on 0161 767 1291.