As the benefits season fast approaches, we've highlighted some of the key considerations you should be making each month in the run-up to the submission deadline.
February
Required Action
To streamline the process, we're reaching out for your preferences through a few quick questions on your PayFit account. The questions will be a required action for your February payroll run. These choices will guide how we report benefits on your behalf.
Once you run your February payroll, your answers are locked in and can't be changed. Your choices impact how benefits are reported to HMRC, so it's worth taking a moment to review and confirm these details with accuracy.
Preparing for processing your benefits in March
Determine which benefits you provide to employees. If you're unsure which benefits you should report, you can refer to the list of expenses, benefits and Class 1A National Insurance contributions on the HMRC website.
For each benefit you provide, gather the costs and contributions for the tax year April 2023 to March 2024 for each employee. You will be either asked to provide the year-to-date employer cost or the monthly costs and contributions, depending on how the benefits are reported.
Tip: Gathering this data is a critical part of the process and should not be left to the last minute. Your third-party provider might need time to prepare your data and is likely to be busier than usual at this time of the year.
March
In line with HMRC requirements for the relevant liabilities to be paid in the correct tax year, some benefits have to be processed before your March 2024 payroll run.
Make sure you review the figures recorded in PayFit against the data from your benefit provider before you run your March 2024 payroll. Please ensure you have checked all benefits provided to employees. Some benefits tend to be missed, such as the ones listed below, so please ensure to review these:
Cars and electric vehicles are set up
Tech schemes
Loans
Assets transferred
Meal vouchers
Cash vouchers
Please remember you'll also need to report the benefits for anyone who left the company in this tax year.
If you process some benefits monthly:
Monthly-processed benefits are recorded on employees’ payslips each month. They include both payrolled benefit schemes and schemes to which employees contribute, whether for themselves or their dependents, as their contributions are deducted directly from their payslip.
As March marks the end of the tax year, make sure to review and confirm the information before closing payroll. This is your final opportunity to verify accuracy or make corrections. These contributions impact the employee's net pay, but once you run your March 2024 payroll, the 2023/24 tax year can't be adjusted.
Any payrolled benefits will also be included in the employee’s taxable income to increase the tax due, so it is extremely important for the correct information to be reported, as the employees are paying the equivalent tax in real time.
If you provide employees with a company car, assets transferred, loans, vouchers or credit cards:
Enter company cars, assets transferred, loans, vouchers or credit cards into the app before closing March payroll for active employees.
If you process benefits through a P11D form at the end of the tax year:
You will not be required to enter any employer information in the app before the closing of March payroll.
Employee and dependent contributions will need to be checked and finalised before the closing of March payroll.
While you have until the closing of May payroll to input the year-to-date employer cost, we recommend reaching out to your benefit provider as soon as possible to prepare the information and input it into the app. This ensures that we can review and submit the information on time.
Tip: For benefits that are payrolled, where tax (and sometimes NI) is calculated through the payroll, these are reported through the full payment submission (FPS) sent to HMRC each pay period and won't be included on a form P11D.
May
The deadline to submit your finalised benefits information on PayFit is the May 2024 payroll run. We have set this earlier deadline for our customers to ensure we have enough time to review and submit all company benefits data in advance of the HMRC deadline.
Before closing May payroll:
HMRC requires you to report for every employee who has been provided with benefits during the tax year, including those who have left your company. You will need to re-activate leavers' profiles to enable PayFit to generate their P11D.
Enter and confirm the year-to-date employer costs for non-payrolled benefits for both active employees and re-activated leavers.
Review benefits reports and confirm the information
June
In June, after submitting your employees’ P11D and/or PayFit’s P11D(b) to HMRC, we will send you an email and make them available in the Documents section. You can return to the Report benefits in kind page at any time to get an update on the submission status.
Preparing benefits reporting for the 2024-2025 tax year
If you registered with HMRC by 6 April 2024 to payroll benefits for the 2024/25 tax year, please ensure you update your PayFit settings for the 2024/25 tax year to reflect this. You can do this by going to Company Settings > Benefits Settings > Set Benefits Preferences and then also updating the preferences of each benefit scheme you operate.
