This paper presents a video encoding method in which noise is encoded using a novel parametric model representing spectral envelope and spatial distribution of energy. The proposed method has been experimentally assessed using video test sequences in a practical setup consisting of a simple, real-time noise reduction technique and High Efficiency Video Codec (HEVC). The attained results show that the use of the proposed parametric modelling of noise can improve the subjective quality of reconstructed video by approximately 1.8 Mean Opinion Scope (MOS) points (in 11-point scale) related to the classical video coding. Moreover, the present work confirms results attained in the previous works that the usage of even sole noise reduction prior to the encoding provides quality increase.