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Guidance Update: Payrolling: tax employees’ benefits and expenses through your payroll

Kevin Waller

Kevin Waller

UK Payroll Specialist

The payrolling benefits guidance page has been updated for the first time since 2018 to revise and expand the section “Tell your employees”

If you are payrolling benefits on your payroll, this is something you will need to know. The new section is below:

Tell your employees

Once you have registered to payroll benefits, you must give your employees written notification explaining that you’re payrolling and what it means for them. You can choose to do this, for example, by:

  • payslip
  • email
  • letter

You must send the notification by 1 June after the end of each tax year. The notification must tell your employees that they will not be taxed twice because you have registered to payroll their benefits with HMRC before the start of the new tax year. You should include the following information:

  • details of the benefits you have payrolled, for example car fuel – this can include what the benefits are, the value, the cash equivalent and which ones have been subject to PAYE tax
  • the amount you have payrolled for optional remuneration (OpRA)
  • details of benefits you have not payrolled

You should also tell your employees what will happen during the first year. They will need to know that:

  • their tax code will change to take out the adjustment for their benefits in kind
  • you will put the adjusted amount through payroll each month and they will pay tax on that amount
  • at the end of the year you will tell them how much taxable benefit they have had in the year and what it was for



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