Overview of Processing Benefits-in-Kind Through Payroll and P11D Reporting

The benefits provided to employees as part of their employment contract are subject to tax and national insurance. The employers can deduct the tax due on the benefit directly through payroll.

This is an optional process and employers can choose if they report benefits using P11D reporting option or process them through the payroll application. The processing of benefit-in-kind using payroll means that if the benefit provided to your employee has tax implications or a taxable cash equivalent, then the employee is taxed each period. The employee's taxable income includes the value of taxable benefit. A combination of different types of benefits can be processed through payroll.

Consider these points while processing benefits-in-kind using payroll or P11D reporting:

• You must give prior notification to HMRC of all the benefit types you intend to process through payroll

• You must report any benefits-in-kind not processed through payroll on the P11D at the end of the tax year

For more information, see the documents on P11D Reporting (Document ID 2393233.1) on My Oracle Support.