The HM Revenue and Customs (HMRC) has several mandatory forms. As an employer in the UK, understanding all these forms and how each works can be challenging, especially if you haven’t been an employer for long. Among these forms are the P11D and P11D(b), forms related to additional employee benefits besides their salaries. While it’s acceptable to offer your employees benefits in kind, such as a company car, or health insurance, HMRC must know about it for tax purposes.
Let’s get you up to speed about these two forms, what they are, and other vital details every UK employer should know.
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What is a P11D Form?
A P11D is an HMRC form that UK employers must complete to report any benefits in kind or expenses they’ve provided their employees or directors in addition to their regular salary. It also shows Class 1A National Insurance contributions.
Benefits in kind are any non-cash payments or benefits that an employer provides to an employee in addition to their salary.
These include a company car, gym memberships, professional memberships and subscriptions, mobile phones and laptops, private healthcare, or a season ticket loan.
Who Needs to File a P11D?
Any UK employer that provides their employees with taxable benefits or expenses not included in their salary must file a P11D. So, if you have provided benefits or expenses to your employees or directors during the tax year, you must file a P11D form, even if the employees didn’t ask for them.
This requirement applies to all employers, regardless of the size and type of businesses, including limited companies, partnerships, and sole traders. It also applies to limited company owners who provide benefits to themselves.
It’s important to note that the responsibility for filing the P11D form lies with the employer, not the employee.
What Needs to be Included in a P11D?
It can be challenging to know what items to report. Simply put, if whatever you offer isn’t part of your employees’ basic salary, then it most possibly is a benefit in kind.
It’s essential to accurately report all relevant benefits and expenses to ensure that the correct income tax and National Insurance Contributions (NICs) are paid.
>> Read more in our complete guide to UK Tax Rates and NIC Contributions.
Common items to include in the P11D form include, but are not limited to:
- Assets transferred, such as company cars, property, goods, or other assets
- Payments you made on behalf of the employee
- Vouchers and credit cards
- Living accommodation you’ve provided for the director or employee or their family or household because of the employment.
- Mileage allowance payments not taxed at the source
- Company cars and car fuel
- Interest-free and low-interest and notional loans
- Private medical treatment or insurance
- Qualifying relocation expenses
- Services supplied, unless the employee’s use of the service for personal reasons, is insignificant compared to how much they use it for work.
- Assets placed at the employee’s disposal
- Other items, including subscriptions and professional fees
The list of what HMRC mandates employers to include in this statutory form can be extensive and changes regularly. It’s, therefore, vital to review HMRC’s guidance to ensure you report all items accordingly.
P11D Exemptions for Some Business Expenses
While a P11D form reports taxable benefits and expenses you provide employees or directors, there are some expenses the HMRC exempts from reporting.
Your employees or directors can reimburse these expenses without additional taxes or NICs.
- Business travel and subsistence expenses
- Uniforms and other clothing
- Work tools and equipment
- Bikes and safety equipment
- Meals and entertainment expenses
- Tax-free childcare
- Education and training expenses
- Annual parties &similar events
- Workplace parking and charging
- Long-service awards
- Small benefits of up to £50
- Home-working allowance
- Health screening
When do I Need to File a P11D?
HMRC mandates all employers to file P11Ds by the 6th of July following the end of the tax year in which the benefits were provided. For instance, the deadline for filing a P11D form for the tax year ending on 5th April 2023 (2022/23) is 6th July 2023.
This means that the deadline for filing P11Ds is not dependent on your organisation’s financial year-end but relates to the tax year.
P11D Penalties for Late Filing
If you fail to file the P11Ds before the deadline expires (6th of July), HMRC may subject you to penalties and interests.
Once you miss the deadline, the HMRC will send you a penalty notice about two weeks later. Failure to file the P11Ds after the notice attracts a fine of £100 per month per 50 employees for each month the P11Ds are later.
According to Schedule 24 of the Finance Act 2007, any employers who signed up for payroll benefits and erroneously sent an RTI return are subject to penalties. You could be charged up to £3,000 per form for providing misleading or incorrect information.
What is a P11D(b)?
This statutory form reports your Class 1A National Insurance contributions on the benefits you’ve provided to employees or directors. Class 1A National Insurance contributions (NICs) are payable on most benefits in kind at the same rate as your National Insurance contributions.
The main difference between P11D and P11D(b) is that the P11D reports the value of each benefit or expense you provide your employees or directors. On the other hand, the P11D(b) reports the total Class 1A NICs due on all benefits and expenses you provide.
How to File a P11D
There are three main ways to file both P11D and P11D(b) forms:
- Online through HMRC’s website (PAYE online service).
- Using commercial software.
- By post (only if the other two avenues have failed or you aren’t able to use them). The HMRC’s address can be found on the forms.
Whichever avenue you choose, ensure that all information you provide is accurate and complete before submitting the form to avoid penalties and interest.
Due to the critical nature of these forms and the penalties, you’ll need a reliable and knowledgeable partner to help you.
That’s where DS Burge & Co comes in. Our experienced accountants can help you to complete your forms correctly and ensure you meet the filing deadline. We can also help you understand the P11D process and identify potential tax savings.
Contact us today to learn more about how we can help you with your P11Ds, P11D(b), and other statutory forms.