Voluntary Payrolling of benefits via OpRA - KPMG United Kingdom
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Voluntary Payrolling of benefits provided via Optional Remuneration Arrangements

Voluntary Payrolling of benefits via OpRA

HMRC grants P11D concession for 2017/18


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It has recently become apparent that the PAYE regulations which accommodate the voluntary payrolling of benefits are not sufficiently widely drawn to also accommodate the voluntary payrolling of benefits provided via Optional Remuneration Arrangements (OpRA). HM Revenue & Customs has now announced a concession for 2017/18 while the necessary changes are made.

The issue

It is important to note that this issue relates only to benefits provided via OpRA; the payrolling of other benefits is not affected.

The problem lies in the fact that the PAYE regulations introduced to deal with the payrolling of benefits explicitly state which sections of the law are to be applied when calculating the the value of a benefit to be payrolled.

However, in the case of benefits provided via OpRA, the sections referred to by the PAYE regulations are no longer correct. It appears that, due to an oversight, the PAYE regulations were not updated when the OpRA legislation was introduced.

Consequently, an employer who is currently payrolling benefits provided via OpRA, and using the new rules to calculate the value of the benefit, is doing so without any legislative support.

This in turn means that such an employer is not an authorised employer for the purposes of the PAYE regulations and so has not had the obligation to file P11Ds in respect of those benefits removed.

Or put another way, the strict position under the law as it stands is that those payrolling benefits provided via OpRA during 2017/18 will generally also need to file P11Ds for those benefits by 6 July 2018.

The Concession

HMRC is aware of the issue and has recently written to clarify the position for employers who are voluntarily payrolling benefits provided via OpRA.

The email states:

“Employers who have registered to payroll BIKs [benefits in kind] are seeking clarification regarding the submission of P11Ds when payrolling under OpRA. Some of these employers have been payrolling the tax on OPRA but identify that a P11D will still be due.

“The current legislative position is that the relevant amount should be reported on Form P11D. However, we appreciate that this will be a burden to employers as they may need to send two separate returns for the same BIK therefore we propose the following concession for employers in this position for 2017-18.

“Where an OPRA employer has:

  1. registered with HMRC to payroll BIKs outside of OpRA for the 2017-18 tax year
  2. and is deducting tax for a BiK which is subject to the OpRA reform

There will be no requirement to complete a P11D as long as they report the Relevant Amount, (per the valuation rules in ITEPA) along with the taxable amounts for payrolling periods through RTI.”  

The email then proceeds to give the following example: 

“£6000 is the relevant amount for 2017/18 in respect of a company car. The employer payrolls from September 2017 and deducts the tax due in respect of the £6000 from the employee’s wages for the remainder of the tax year.”

The email ends:

“Please note this concession only applies to employers who registered to payroll BiKs for 2017/18 outside of OPRA and have been payrolling Relevant Amounts where there is tax due.”

Next Steps

If you have any queries, please do not hesitate to get in touch with your normal contact or e-mail employersclub@kpmg.co.uk

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KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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