One of the questions we get asked all the time is “What are P11Ds?” and “How do we report employee benefits to HMRC?” We’ve tried to summarise the P11D form and it’s uses below to help understand what is needed in this situation.
In many businesses, alongside paying employees their basic pay and other pay-related items such as overtime and bonuses, employers will often provide benefits and reimburse business expenses.
At the end of the tax year, employers must submit a P11D form to HMRC for each employee provided with benefits or expenses.
Unless they are exempt, the value of these benefits and expenses must be reported to HMRC at year-end to allow for the tax and Class 1A NIC to be collected. Employers pay Class 1A NIC on the benefits and expenses that aren’t subject to Class 1 NIC through the payroll.
P11D – submission to HMRC
The benefits and expenses are reported to HMRC through form P11D on your Self Assessment return. An employer’s declaration is required, which is made on form P11D(b). The declaration also adjusts the amount of Class 1A NIC that is due. Necessary, for example, where benefits are payrolled.
Both forms must be submitted by the employer to HMRC by the 6th of July for the previous tax year, and any taxes must be paid by the 22nd of July. The information on the P11D must also be provided to employees.
How can F9 Consulting help?
At F9, we have extensive experience helping employers meet their tax and NIC obligations. We can help you identify which benefits should be payrolled by your business and can review your current processes to find the best solution for you.
The main expenses and benefit
- Company cars and car fuel
- Vans and van fuel
- Loans for rail season tickets
- Mileage allowance payments
- Interest-free, low interest and notional loans
- Private medical and dental insurance
- Assets provided to an employee that has significant personal use
- Self Assessment fees paid by the company
- Non-business travel expenses
- Non-business entertainment expenses
Some expenses are exempted. These include:
- Business Travel
- Business entertainment expenses
- Credit cards used for business purposes
- Fees and subscriptions.
What are P11D Penalties?
HMRC can impose penalties where employers submit incorrect returns or fail to submit returns. The maximum penalty is £300 per form; following this, a penalty of up to a maximum of £60 per day can be imposed.
Failure to file the P11D(b)
- During the first 12 months – £100 per every 50 employees, or part batch of 50, per month or part month of lateness
- A penalty up to the amount of the unpaid Class 1A NIC can be imposed
Late payment of Class 1A NIC
- payment must be made within 30 days of the due date (the 19th of July for postal payments or the 22nd of July for electronic payments), or a penalty of 5% of the amount that is late will be due
- a further 5% can be charged if payment isn’t made within six months, with another 5% due where payment isn’t made within 12 months
Errors on P11D and P11D(b)
The penalties are based on the percentage of potential revenue lost according to the deemed behaviour of the taxpayer:
|Behaviour||Penalty range for an unprompted disclosure||Penalty range for prompted disclosure|
|Careless||0% to 30%||15% to 30%|
|Deliberate but not concealed||20% to 70%||35% to 70%|
|Deliberate and concealed||30% to 100%||50% to 100%|
Interest on late payments
If Class 1A National Insurance contributions are paid late, or an underpayment is discovered, interest may be payable on the amount outstanding.
Statutory interest for late payment is charged immediately from the 19th of July, or the 22nd of July if payment is made by an approved electronic method.
Interest is also charged on the late payment of any penalties imposed for the late or non-submission of forms P11D and P11D(b).
You can payroll all benefits except:
- employer-provided living accommodation
- interest-free and low-interest (beneficial) loans
These benefits must still be reported on a P11D, even if you’re payrolling other benefits for the same employees.
If company car benefits are payrolled, a form P46(Car) does not need to be submitted unless the car benefit is not being payrolled.
Changes affecting benefits and expenses
If things change, such as an employee leaving or a company car changes, the taxable amount going through your payroll will need to be recalculated. The following are examples of when changes will need to be made.
The benefit will usually end on their last working day. The taxable benefit to payroll in their remaining paydays should be calculated.
Value of a benefit changes
A revised taxable amount to payroll will need to be calculated where, for example, a new company car is provided to an employee.
There will need to be a recalculation of the amount to payroll and submit the updated amount.
Wholly, exclusively and necessarily for work purposes
Items not intended for use wholly, exclusively and necessarily on the job are usually a benefit in kind and, if they are not payrolled, should appear on the P11D. Whether or not they are payrolled, the employer will still need to pay the Class 1A National Insurance Contributions.
The complete list of benefits is located here: https://www.gov.uk/expenses-and-benefits-a-to-z
If you aren’t sure what you should include on your P11D, contact a consultant at F9, and we can help you get the correct information to HMRC.
Withdrawing from benefits
Even when benefits are no longer being provided, employers may still need to contact HMRC to inform them of this. To avoid the chase emails and letters from HMRC, F9 can still take care of things for our clients by dealing with the forms and paperwork that are required.
Paying Class 1A National Insurance Contributions
Payment can be made from your company bank account using this reference to the bank detailed below. Payment is required by the 22nd of July.
|08 32 10||12001039||HMRC Cumbernauld|
You can pay online here: https://www.tax.service.gov.uk/pay/enter-accounts-office-reference?traceId=10760078
Payment can be made by post, but HMRC must receive the payment by the 19th of July.
Here to Help
If you have any questions about P11Ds or expenses and benefits F9 Consulting are here to help. We have certified accountants in London, Essex and Manchester and are available 6 days a week.