A new trial from HMRC is set to allow taxpayers with a company car to change their benefit details online.
Individuals on the Pay As You Earn (PAYE) system who receive fuel and car benefits will be able to amend their details via the web, so that the correct tax code will be calculated and issued to their
employer. This will mean that taxpayers do not have to make phone calls to HMRC to report benefit changes, and are more likely to pay the correct amount of tax.
Mark Dearnley, HMRC’s chief information and digital officer, spoke of the trial and said that some new digital services were being introduced to make it easier, and more convenient, for taxpayers to notify HMRC of changes that could affect their tax code. Dearnley said:
“Our digital services will deliver significant savings to HMRC’s customers in both the cost of phone calls and time spent dealing with the department. They will also mean that people can deal with the department when it is most convenient for them – rather than for us.”
According to Dearnley, the trial will provide feedback from customers to ensure that the service is suitable for taxpayers. The service will also be secure as it will incorporate GOV.UK Verify, which is a new method through which people can prove their identity when using digital services provided by the government.
HMRC has also introduced the use of Real Time Information to payroll benefits-in-kind. Employers who volunteer for this system can report employee benefits in real time, so that taxpayers don’t have to utilise the new system.
Reporting benefits and expenses
Currently, employee benefits and expenses are reported at the tax year end, using a form P11D. There are various types of benefit that have to be reported to HMRC, including company car benefit, childcare, travel and entertainment expenses, and medical insurance. There are different rules to follow for each type of benefit or expense, so that you know whether tax and National Insurance has to be paid.
Some types of benefits and expenses can be included with payroll, as part of an employee’s pay. If an employer decides to do this, HMRC must be informed.
Reporting through the payroll
If a benefit or expense is liable to PAYE, an employer has to include it with the regular earnings for that period, using the usual payroll method. If the benefit isn’t liable to tax and National Insurance, add it to the system so it is included for Class 1 NICs only, not PAYE.
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