
Not sure if payrolled benefits go on your Self Assessment tax return? You're not alone. Many struggle with HMRC's rules, but understanding this can save you time, stress, and money. Here's what you need to know...
What are Payroll Benefits in Kind?
Payrolled benefits in kind are employee perks that employers opt to tax through the payroll system, rather than reporting them separately at the end of the tax year.
This method allows for real-time tax collection on benefits, aligning with each payroll cycle.
When benefits are payrolled, they appear directly on the employee's payslip, ensuring transparency and immediate reflection of the taxable value.
This simplifies the process for both employers and employees, as it consolidates the taxation of benefits with regular salary payments. Payrolled benefits on payslip make it easier for employees to see the taxable value of their perks.
Remember that employers must register with HMRC payrolling benefits before the start of the tax year to begin payrolling benefits.
Once registered, HMRC adjusts employees' tax codes to remove any benefit-related deductions, preventing double taxation.
It's important to note that while payrolling benefits is currently optional, the UK government has announced plans to make payrolling benefits mandatory for most benefits in kind starting from April 2026.
Do You Need to Include Payrolled Benefits in a Self-Assessment Tax Return?
If your employer has taxed your benefits through payroll, a process known as payrolling benefits in kind, you generally do not need to include these payrolled benefits in your Self Assessment tax return.
This is because the tax on these benefits has already been collected at source and is reflected in your P60.
This raises the question, “Do I need to submit a P11D if benefits are payrolled?”. The answer is no, as payrolled benefits are already accounted for through payroll.
However, if you receive benefits that are not payrolled, your employer is required to provide you with a P11D form detailing these benefits.
In such cases, you must report the information from the P11D in your Self Assessment tax return.
How Does P11D Affect Tax Code?
HMRC uses the P11D form to adjust your tax code by including the taxable value of benefits in kind. This adjustment reduces your personal allowance, increasing PAYE deductions to cover the tax owed on these benefits.
Who Pays P11D Tax - Employer or Employee?
For P11D benefits, the employee pays income tax on the benefits received, while the employer pays Class 1A National Insurance contributions on the taxable value of these benefits. This division of responsibility ensures both parties meet their respective tax obligations.
What We Think
Payrolling benefits in kind is a great way to make tax simpler. By taxing benefits directly through payroll, it saves time and avoids surprises at the end of the year.
However, the current system can still be confusing. Some benefits are taxed through payroll, while others need to be reported on a P11D, leaving people unsure about what to include in their Self Assessment tax return.
We think making payrolling benefits mandatory for all employers, as planned from 2026, will help clear up this confusion. Until then, it’s important to check your payslips and P60s carefully. If you’re not sure, ask your employer or HMRC for guidance.
How JAFA Can Help
At JAFA, we know that navigating tax systems can be overwhelming, especially when it comes to payrolled benefits and Self Assessment tax returns.
That’s why we are here to help you simplify the entire process. By analysing your payslips, P60s, and P11Ds, we ensure you know exactly what to include in your tax return, taking away the guesswork and stress.
Furthermore, we use AI technology that integrates all your financial data to make tax reporting seamless and accurate, while our team of experts is always ready to offer personalised advice if you’re unsure about anything.
Contact our expert accountants in Birmingham, UK, either by booking a FREE discovery call or calling us on +44 121 227 6277.
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