Paying tax on benefits through your payroll

Employers can deduct and pay tax on most employee expenses through your payroll (sometimes called ‘payrolling’) as long as you have registered with HMRC before the start of the tax year (6 April). This can be particularly beneficial in the first year that a company car is provided to an employee as it means that they won’t get a big tax bill at the end of the year.

Employers do not need to submit a P11D form for an employee if you’re paying tax on all their benefits through your payroll. However, they still need to submit a P11D(b) form so they can pay any Class 1A National Insurance they owe.

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