In the October 2017 edition of its Employer Bulletin, HMRC has clarified that upcoming changes to the way Benefits in Kind (BiKs) are valued where there is an optional remuneration arrangement (OpRA) mean that employers will need to update payroll software for P11D and P46 (Car) reporting.

Where there is an OpRA, the taxable value is now the higher of the cash foregone or the taxable value under the normal BiK rules. This applies to all BiKs, including currently exempt BiKs. Arrangements entered into before 6 April 2017 retain their old treatment, but arrangements entered into since 6 April 2017, or arrangements which have been varied or renewed are taxed under the new rules.

Some of the descriptions on the P11D data submission will also change:

•  ‘cost to you’ (or similar) descriptors will read ‘cost to you or amount foregone’. If you are using an OpRA, and the amount of cash foregone is higher than the cost to you, you should enter the cash foregone
•  ‘cash equivalent’ descriptors will read ‘cash equivalent or relevant amount’. If you are using an OpRA, and the amount of cash foregone is greater than the cost to you (as above), then you should enter the taxable amount (known as the relevant amount).

The P46 (Car) data to be submitted will also have a new “cash forgone” field. This is the cash foregone for the car only (excluding fuel, maintenance or any other attributable service). This should be completed whenever there is an OpRA.

For more information on reporting Benefits in Kind, click here.