Car & Fuel Benefits
Car and Fuel Benefit in Payroll
From the 2016/2017 tax year, employers were able to account for the tax on the benefits in kind (BiKs) they provide to employees via PAYE instead of sending a P11D after the end of the tax year. The value of the benefit is added to the employee’s taxable pay for each pay period and reported via FPS.
You can payroll all benefits in kind apart from:
- Vouchers and credit tokens
- Employer provided living accommodation
- Interest free and low interest (beneficial) loans
This means you can also choose to payroll company car BiKs instead of submitting the P46(Car) form. The benefits are calculated in the same way as previously, but the cash equivalent is divided into an equal amount for each pay period, with any residual amount going through the final pay period for the year.
In your payroll software, you are able to add cars, allocate them to employees, calculate the cash equivalents of the car and fuel benefit for the year and process a prorated amount through payroll.
To use the new benefit fields, the company must be registered with HMRC to payroll benefits. You can do this using your HMRC online account.
How to process car and fuel benefits in your payroll software
Please refer to the software specific guides below for your payroll product:
|Car and fuel benefits in Earnie IQ|
|Car and fuel benefits in Earnie|
|Car and fuel benefits in IRIS Payroll Professional|
|Car and fuel benefits in IRIS Bureau Payroll|
|Car and fuel benefits in IRIS Payroll Business|
Using Payroll to process other types of benefits in kind
You can use notional payments to payroll benefit in kind for employees. Please refer to the guides below for product specific instructions.
|Payrolling benefits in kind IRIS Payroll Business|
|Payrolling benefits in kind IRIS Bureau Payroll|
|Payrolling benefits in kind IRIS Payroll Professional|
|Payrolling benefits in kind Earnie|
|Payrolling benefits in kind Earnie IQ|
PLEASE NOTE: Notional payment functionality is not available for PAYE-Master or GP payroll users.