Cars & Benefits - Create a benefit in Payroll cloud

This guide shows you how to add a benefit in Payroll Cloud, using private medical treatment or insurance (PMI) as a worked example. The same process applies to all benefit types.

Contents

• Before you start
• Add a benefit
• Verify the benefit on the payslip
• Common issues
• Related articles

Before you start

Make sure you have the following before adding a benefit:

• The employee's record already exists in Payroll Cloud.
• The correct tax year is open and you know which pay period you are processing.
• You have permission to edit employee benefits in Payroll Cloud.
• You have the benefit details to hand: cost or amount forgone, any amount made good by the employee, accounting method, and year-end behaviour.

Add a benefit

Step 1: Open the employee's Cars & Benefits tab

Go to the Employees menu, select the relevant employee, then open the Cars & Benefits tab.

Step 2: Click + Create

Click + Create in the top-right of the Cars & Benefits tab.

Step 3: Choose the benefit type

Select the benefit you want to add. These codes correspond to HMRC P11D benefit categories:

• C -  Vouchers and credit cards
• E -  Mileage allowance payments not taxed at source
• F -  Car
• G - Vans and van fuel
• I -  Private medical treatment or insurance

For this example, choose I - Private medical treatment or insurance.

Step 4: Complete the benefit details

Fill in each field on the Add new private medical treatment or insurance form:

• Display name: the label that appears on the payslip (for example, PMI). Use a clear, consistent naming convention so employees and payroll administrators can identify the benefit at a glance.
• Cost or amount forgone: the total taxable value of the benefit for the remainder of the current tax year.
• Amount made good: any contribution the employee makes towards the benefit. This reduces the taxable value but does not deduct money from the employee's pay (see the note below).
• Accounting method: choose Payroll to tax the benefit through payroll (payrolled benefit). Other options will treat the benefit differently for tax reporting, so check your payroll policy before changing this.
• Year end behaviour: choose Repeat next year to roll the benefit forward automatically into the next tax year. Choose another option if the benefit is one-off or ends with the tax year.

Step 5: Worked example (PMI)

Annual PMI cost: £240, equal to £20 per month. Payroll is in month 11, so there are 2 remaining months in the current tax year.

Calculation: 2 months × £20 = £40. Enter 40 in the Cost or amount forgone field. Payroll Cloud spreads this across the remaining pay periods.

Step 6: Save

Click Save to add the benefit to the employee's record.

Verify the benefit on the payslip

Open the employee's pay and check the following:

• The benefit appears under Taxable Benefit with the correct display name (for example, PMI)
• The Total Taxable Benefits value is updated
• The Gross for Tax has increased by the benefit amount (in this example, by £20 for the current pay period)
• Tax and National Insurance have been recalculated

Common issues

• Benefit not showing on the payslip? Check that the pay period is open and that the Accounting method is set to Payroll
• Wrong amount taxed? Confirm that Cost or amount forgone covers only the remaining months of the current tax year, not the full annual cost
• Employee contribution not deducted? Remember that Amount made good only adjusts the taxable value - you still need a separate net deduction
• Benefit needs to end this year? Set Year end behaviour to a value other than Repeat next year

Related articles

• Cars & Benefits - Delete a benefit in Payroll Cloud