This article explains how P11Ds and Class 1A NIC should be handled where you run more than one payroll for the same PAYE employer.

P11Ds are per employer, not per payroll

HMRC looks at the legal employer (one PAYE reference), not how many payrolls you use.

If you run 2 or more payrolls for the same PAYE reference, you must still ensure:

• Each employee receives one complete and accurate P11D for the tax year
• All benefits for that employee are included on that one P11D
• Benefits are not split or duplicated between different payrolls

Possible Issues

• The same employee appears in more than one payroll, leading to:
  • Duplicate P11Ds, or
  • A P11D that is missing some benefits

Employees on more than one payroll (duplication and tracking)

Where employees move between payrolls during the year, or work across multiple companies in the group:

• Use a single, consistent employee identifier (e.g. Payroll ID)
• Make sure benefits and expenses are aggregated across all relevant payrolls before you produce P11Ds

Possible Issues

• Company car recorded in payroll A, private medical insurance recorded in payroll B → neither payroll holds the full picture for that employee
• Two separate P11Ds produced for the same person

Payrolling benefits

If you are payrolling benefits for some or all employees:

• The cash equivalent of the benefit should be processed in the correct payroll each pay period
• At year end, you still need to be confident that the total benefit per employee is correct, regardless of which payroll(s) they were paid through

Possible Issues

• Under- or over-taxing if:
  • Only part of the benefit is payrolled, or
  • Different parts of the benefit are processed separately in different payrolls

Class 1A NIC – P11D(b)

Class 1A NIC is always calculated on the total taxable benefits for the employer (per PAYE reference), not per payroll.

Where you have more than one payroll:

• You must combine the benefit totals from all payrolls for that PAYE reference
• The combined figure is then used for:
  • The P11D(b)
  • The Class 1A NIC calculation

You can manually adjust the total benefits figure at the P11D(b) stage to reflect the combined amount, but you must only do this in one employer record.

To do this, go to RTI → New → Expenses and Benefits (EXB) and:

• In the section “Do you need to adjust the total benefits figure?” select “Yes”.
• Enter a brief description and the amount of total benefits liable to Class 1A NICs – this amount will be added to the current total held for this employer.

Possible Issues

• Underpayment of Class 1A NIC where one payroll is omitted or incomplete
• Possible HMRC interest and penalties if the total Class 1A is incorrect

HMRC checks and audits

For HMRC, there is still only one employer per PAYE reference, even if you operate multiple payrolls.

If your records are split:

• You must be able to reconcile benefits and Class 1A NIC centrally
• You should be able to show:
  • How you combined data from different payrolls
  • How you ensured each employee’s total benefits are complete

Recommended controls

To stay compliant when using multiple payrolls, we recommend:

• A central benefits record/register (do not rely solely on payroll outputs)
• A unique employee ID used consistently across all payrolls
• A clear year-end consolidation process for P11Ds and P11D(b)
• A single owner or team responsible for P11D reporting
• Formal reconciliations between:
  • P11D / P11D(b) benefits
  • PAYE Settlement Agreement (PSA) totals
  • General ledger / accounts

Summary

Using multiple payrolls is perfectly acceptable operationally. However:

HMRC are interested in the PAYE employer, not how many payrolls you run.

The main risk is at consolidation stage:

• Benefits missed completely
• Benefits reported twice
• Incorrect Class 1A NIC on the P11D(b)

Putting in place a central record/register, clear ownership and year-end checks will greatly reduce the risk of P11D and Class 1A errors.