P11Ds not always needed for payrolled optional remuneration arrangement benefits-in-kind

HMRC announced a concession on 12 July under which employers who 

  • have registered before the start of the tax year to payroll a benefit-in-kind (BiK), and
  • are providing that BiK under optional remuneration arrangements (OpRA) and are accounting through the payroll for PAYE income tax on the correct cash equivalent value,

are excused from filing forms P11D for 2017/18 in respect of those BiKs.

The concession does not excuse employers from accounting for the Class 1A NIC due through forms P11D(b), as for non-OpRA BiKs.

The need for this concession arises because the PAYE Regulations have not been updated following the OpRA BiK changes in s7 and Sch 2, Finance Act 2017.

We wrote to HMRC in June recommending that the PAYE Regulations should be amended and backdated to 6 April 2017 to accommodate the new OpRA provisions within the payrolling of BiK rules.

In the concession, the text of which is reproduced below, affected employers are referred to as voluntarily payrolling.


From April 2016, employers can register before the start of the tax year to account through the payroll for tax on certain BiKs provided to employees. This obviates the need for the employer to complete forms P11D for those BiKs, but Class 1A NIC still needs to be accounted through forms P11D(b).

From 6 April 2017 employee BiK provided by employers under OpRA are valued for tax and Class 1A NIC on, broadly, the higher of the cash foregone and the value of the BiK calculated under normal rules, less amounts made good for the BiK by the employee to the employer.

Examples of OpRA include flexible benefit plans and salary sacrifice schemes, including where a where a cash allowance can be exchanged for a BiK (frequently a car).

The new ‘higher of’ valuation rule applies even there the BiK would be exempt, eg mobile phones and workplace parking.

The amount which is higher is ascertained before deducting any amount made good. The higher amount net of the amount made good is, if positive, subject to tax and Class 1A NIC.

Text of HMRC concession dated 12 July 2017

Position for employers who are voluntarily payrolling Benefits in Kind (BiKs) in the current tax year under the new Optional Remuneration Arrangements (OpRA).

Employers who have registered to payroll BIKs 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.


£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.

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.