If you already pay benefits or expenses through payroll you need to register these benefits and expenses with HM Revenue and Customs (HMRC) in order to remain compliant with UK legislation and regulations. All benefits can be put through payroll apart from vouchers, credit tokens, living accommodation provided by the employer, or low-interest or interest-free loans. Here are the basics of what you need to do to report and record expenses and benefits for employees.
Inform Employees
Once you have registered to pay the benefits you need to send employees a letter explaining what you are putting through the payroll and what this means for them. In addition, you need to provide employees with details of the benefit that has been put through payroll, the cash equivalent of the benefits that are on the payroll, and details of any other benefits that have not been payrolled. It is most important that you communicate to staff the benefits that are subject to tax, and the value of the benefit that has been taxed.
Deduct Tax
In order to deduct tax from the employees pay you need to add the taxable amount of the benefit to the pay in order to deduct the right amount of tax.
Work Out Expenses
As well as benefits, you must also put expenses through payroll and work out the correct taxation on expenses. As these can be complex issues it is advisable to use a professional HR department or an outsourced HR and payroll provider so you can be sure you are up-to-date and compliant with all relevant legislation and regulations.
Outsourcing payroll can save you time and money, and make it much easier to handle complex tax requirements and considerations when you have multiple employees earning different pays, and getting different benefits. Using one of the payroll services uk companies can take advantage of, you benefit from a cost-effective service that also minimises the amount of time you need to spend working out how to correctly record and report items like expenses and benefits. A professional payroll provider will handle all these issues for you, freeing up more time to focus on valuable aspects of your business.
Expenses and benefits are difficult to calculate and difficult to administer to ensure you are not making any tax mistakes. Take advantage of professional help by outsourcing this task to a provider with experience in handling expenses and benefits for large and small companies.