WFM UK | Payroll UK: BIK Module - How Payrolled Benefits are Reflected in Payroll

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Overview

Payrolling Benefits in Kind changes how benefits interact with payroll, but not what payroll is fundamentally responsible for. Instead of reporting benefits after the fact via P11D, the taxable value of those benefits is brought directly into payroll calculations, ensuring tax is collected in real time.

This article focuses specifically on the downstream payroll impact of Payrolled Benefits. It assumes benefits have already been created and applied to employees, and explains what happens next once those benefits are processed through payroll.

At a high level, Payrolling Benefits affects payroll in the following ways:

• Employee Payroll Summaries display Benefit in Kind values as notional payments for tax purposes, allowing the tax calculation to correctly include the benefit value without affecting net pay.

• Payroll Previews include the same notional payments, ensuring visibility of the tax impact before payroll is finalised.

• Full Payment Submissions (FPS) include the required data items to report payrolled Benefit in Kind values to HMRC.

• The P32 screen is updated to show total Benefit in Kind amounts for the employer for each pay period, providing a complete and transparent payroll breakdown. These values are not included in the Employer Payment Summary.

• Reporting and post-payroll outputs related to Payrolled Benefits are covered in a separate article.

This article also explains how Payrolled Benefit values are calculated and introduced into payroll, and how those values flow through payroll calculations without creating payments to the employee.

Important: Before the Payroll module can process any benefit taxable amounts, ensure that benefits are created at both company level and employee level.

Contents

• How Payrolled Benefits Are Reflected in Payroll
  • Employee Payroll Summary
  • Payroll Preview
  • View P32
  • Full Payment Submission (FPS)

How Payrolled Benefits Are Reflected in Payroll

For more information on how the Notional BIK amounts for Tax and determined, please review this article.

This section explains how Payrolled Benefits are reflected within payroll once they have been configured and applied to an employee, with the cash equivalent determined by the BIK module.

It focuses on where payrolled benefit cash equivalent values appear during the payroll process, including payroll calculations, employee-facing outputs, and statutory submissions. The benefit values are introduced as notional taxable amounts, ensuring they are included in tax calculations without affecting gross pay or net pay directly.

Employee Payroll Summary

To see an employee's payroll summary, go to:

• Payroll > Employees > Employee List > find and select Employee > View Payroll Summary (Top Right)
   OR
  • Payroll > select the Payroll in Current Pay Runs (home page) > find and select Employee
  • Payroll  > Pay Runs > Current Pay Run List > select Payroll > find and select Employee
• Where a benefit is processing and attracts the tax liability, an element will be visible called Notional Payment for Tax (BIK):

• Using Fig.1 above, the difference between "total" pay and "gross taxable pay" can be seen, and that difference is the BIK amount for the pay period, as a notional payment

• To see the total value for the tax year on notional payments for tax, select Click Here to View Year to Date Figures (Fig.1)

  • The first amount represents any notional Benefit in Kind value applied as part of a mid-tax-year implementation or application (not calculated within Fourth payroll)

  • The second amount represents the notional Benefit in Kind value calculated and applied as part of the ongoing payroll processing for the remainder of the tax year (via Fourth Payroll)

Payroll Preview

This information can also be found in the payroll's 'basic preview'. 

To see this, go to:

• Payroll > select the Pay Run from "Current Payruns" on the home page
• Page Links > Preview > Run the Basic Details Preview
  OR 
• Payroll > Pay Runs > Current Pay Run List > Preview > Run the Basic Details Preview

This can be seen in the export view also. 

• Select Export to Excel at the top of the preview pop-up, and open in Excel

View P32

The total value of notional payments for each tax month can also be viewed on the View P32 page at company level. To access this, go to:

• Payroll > Administration > Company Setup > find and select Company > Page Links (Top Right) > View P32 Details > Select Tax Month (P32 will load as a pop up)

Please note: This value is read-only and does not affect any reclaim amounts submitted on the Employer Payment Summary (EPS). It is provided for transparency only, to show the total tax month impact alongside the Total Tax Due values.

Full Payment Submission (FPS)

When Benefits in Kind are payrolled, HMRC must be informed of those values through the Full Payment Submission (FPS) rather than via end-of-year P11D reporting.

This section explains how payrolled benefit values are included in the FPS and how payroll meets HMRC’s reporting requirements for Payrolled Benefits. It focuses on the data submitted as part of each FPS run and how this reflects the notional taxable amounts applied in payroll.

The inclusion of payrolled benefits in the FPS ensures HMRC receives timely and accurate information on taxable benefit values as tax is collected throughout the year.

The full FPS Specification can be found here, for the 2026/2027 Tax Year. This will change from the 2027/2028 Tax Year. The highlighted data items for Payrolling Benefits in Kind are:

Please note: In Period and YTD Taxable Pay data items will include Payrolled Benefit Values too.

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