Deadline approaching for completion and submission of P11D forms
Benefits in kind and certain taxable expenses provided by a business to its employees need to be reported to HMRC each year, with tax and National Insurance Contributions (NICs) payable.
As the reporting deadline is looming, we explore the requirements below to help ensure timely compliance and avoid any financial penalties.
How to report
Reporting is dealt with by completing and submitting forms P11D and P11D(b):
P11D – completed per employee to report the benefits/expenses provided. HMRC use this to adjust the employee’s PAYE code (to collect tax at source via ongoing earnings). The employee will need this to complete their tax return if applicable.
P11D(b)– the employer’s declaration that all P11Ds are correct. This also confirms the total Class 1A NICs due (calculated at 14.53% for 2022/23 on the total benefits provided).
A guide on how to complete can be found here.
What falls under the scope of a P11D form?
Some of the more commonly reported items include:
Company cars and fuel
Interest-free (or low interest) employee loans
Private medical insurance
Living accommodation
Home broadband/phone costs
Assets used by or transferred to employees
Non-business expenses by the company (e.g. gym membership, personal expenses)
Deadlines & penalties
P11D & P11D(b) forms must be filed by 6th July following the end of the tax year (i.e. 6th July 2023 for the 2022/23 tax year). Late P11D forms attract penalties of £100 for every 50 employees per month.
The resulting Class 1A NIC must be paid by 19th July, with interest charged on any late payments.
Payrolling benefits
Businesses also have the option to payroll their benefits in kind, as an alternative to submitting P11Ds for each employee. This ensures that the correct tax is deducted in real time on benefits and can avoid some of the confusion that can occur with PAYE coding changes. Overall, payrolling benefits in kind can significantly reduce P11D reporting requirements, reduce risk, and free up valuable administration time for the business.
With the exception of beneficial loans and accommodation, all other benefits can be payrolled. An employer can payroll all benefits or just certain ones.
Employers must register to payroll their benefits before the start of the tax year via their HMRC account and select which benefits they wish to payroll. If this is not done, then employee P11D forms will still be required.
Where benefits are successfully payrolled, the employer declaration form P11D(b) will still be required in order to report the Class 1A NICs due.
Any businesses considering registering to payroll benefits should start planning now for the 2024/25 tax year to ensure all appropriate administrative hurdles are taken care of.