Once an organisation has registered for payroll benefits, it is required to provide written notice to its employees explaining why they are receiving benefits and what this means for them. This can be done by payslip, email, or letter.
Employees must be notified by the 1st of June following the conclusion of each tax year that they will not be taxed twice. This is because the company registered with HMRC to have their benefits paid out before the new tax year began.
The following information should be included:
• Details of the benefits that have been payrolled – for example, car fuel – this can include what the benefits are, their value, the cash equivalent and which ones have been subject to PAYE tax
• The amount that has been payrolled for Optional Remuneration (OpRA)
• Details of any benefits that have not been payrolled
Employees should also be advised of what will happen during the first year. They will need to be aware that:
• Their tax code will change to take out the adjustment for their benefits in kind
• An adjusted amount will be processed through payroll each pay period, and tax will be applied to that amount
• At the end of the tax year, they will be told how much taxable benefit they have had in the year and what it was for
Where there are new employees with payrolled benefits, they must be advised how the benefit will be taxed.
They must be informed that:
• Their tax code may be amended to adjust any benefits from previous employments
• The new benefit will not be included within their tax code
• Any underpaid tax they may be paying through their existing tax code will still be collected through their tax code
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