Payrolled Benefits

In April 2026 it will become mandatory for employers to submit data on benefits to be taxed via payroll in their RTI submissions.

We have designed our 'Payrolled Benefits' function to be compliant when this deadline arrives.

The basic principles of the function

XCD is uniquely flexible in how it handles payments to employees. Financial control was implemented as a function to decide rule groups and treatments of specific payments. This is so that employers would only have a single place to edit to control the behaviour of any payment.

**This applies to newly created records only, current records that exist before the change will need to be ended and restarted**

Financial Control markers are moved to the employee pay element as they are created so the system knows the controls to implement when payment is processed through the payroll. This is how the system identifies if a payment is taxable for example.

Using this configurability we have added a new checkbox to the system to allow employers to mark a specific payment (of type benefit) as a 'Payrolled Benefit'

System: payrolled benefit

This marker found on the Financial control records for benefits allows you to set a record to be included in the value submitted to HMRC on the Employees RTI submisson.

This marker appears on the benefits page layout when reviewing an employee payment to confirm the amount processed will be included in future RTI submission.

NOTE: Its also important the "Employer taxable" and Class1a Niable is also marked as true so the benefit is included in the taxable pay etc.

Edit the Financial Control record to include "System: payrolled benefit"

Add the pay element to the employees Regular benefits section on the Reward tab

Check the marker has been applied to the payment

Process the employee through the payroll

Once the system sees this marker against the employee payment it will inflate the employees taxable pay as required for the period and add the amount to the required reporting field to HMRC

The payment will appear as a 'Third party payment' that is taxable

Whilst not displayed as standard the 'Benefits taxed via payroll' value can be displayed on the HMRC tab of the employees pay summary to confirm the period value being sent to HMRC on the RTI submission

The 'Benefits taxed via payroll' field may be included on the payslip lower YTD section where required to allow the employee to see the effect on their pay. Please contact support to arrange this.

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