Benefits, expenses and outsourcing payroll

by Liz Grange

New rules for reporting benefits and expenses for business owners and their staff are being introduced, and at Optimum we’re ensuring our outsourced payroll clients get ahead.

Currently, a P11D(b) form must be submitted every July to HMRC, detailing the year’s benefits and expenses such as private healthcare and company cars. The employer then pays any Class 1A National Insurance owing on these.

However, from April 2026, reporting and paying any NI due must be done in real time, via the payroll. There is an advantage to real time reporting, as payments will be spread across the tax year.

At Optimum, our expert payroll team handle P11D processing for dozens of companies. We will be registering and moving them across to the new system from April 2025. This means any issues or discrepancies can be ironed out before the legislation becomes mandatory in April 2026.

At the same time, the new Government is planning a number of changes to employment law, which are likely to have implications to payroll, such as removing zero hours contracts and the extension of statutory rights, like sick pay. Again, outsourcing payroll will ensure any new rules are being followed.

Remaining compliant is just one of the ways in which our payroll team add value to our clients, who trust us to look after that essential task of paying their staff.

When we take over the payroll for a new client, it’s not uncommon to find the different types of tax relief on pensions have been set up incorrectly. Smaller, newer employers often find the compliance around statutory entitlement, such as maternity leave, sick pay, and holiday entitlement complicated.

So, what are the other benefits of outsourcing payroll?

• Saving time. All a business needs to do is give the payroll provider information on standard hours worked, plus any variations such as days off for sickness or holiday.
• Accuracy. Using a payroll professional reduces the risks of errors.
• Queries. A payroll professional can deal with any queries from employees and HMRC.
• Employee retention. Paying wages accurately and on time enhances a business’s reputation as an employer.
• Professional support. Payroll clients at Optimum also have access to accountancy and legal services.
• Cost. When time saving and convenience are factored in, outsourcing becomes a very cost-effective option.
• Peace of mind. By outsourcing payroll, the burden is taken off the business owner’s shoulders.

If you have a limited company and you are your only employee, you might feel outsourcing payroll is unnecessary. However, mistakes can still be made, even where there is a single payee. The level of salary drawn by company directors needs to be the most tax efficient, taking into account National Insurance thresholds, any other income, and different allowances that they may be entitled to.

If you are struggling to make time for your payroll, or have any concerns about being compliant, or simply want some help and advice, please get in touch with Liz and the team, based in Swindon and Cheltenham.