There is a lot of jargon to learn when you run a business, and many different forms you need to fill out to make sure that you abide by HMRC rules and regulations.
Here we will explain everything you as an employer need to know about P11D expenses and benefits in kind, so that you can make sure you have everything covered.
What is a P11D?
A P11D form is used to report benefits in kind to HMRC. These are employee or director benefits that are received in addition to an annual salary and have not been subject to PAYE tax.
Benefits in kind effectively increase the value of an employee’s earnings but unlike their normal salary, these benefits have not been subject to PAYE deductions. In these cases, a P11D form is submitted to HMRC to declare this extra income.
The P11D form must show the amount of any additional tax or Class 1A National Insurance due on the expenses and benefits.
Do I need to submit a P11D?
If you provide your employees with staff benefits such as gym memberships or dental care plans, you will need to submit a P11D form.
If no benefits have been paid during the tax year ending 5th April then you can either:
- submit a ‘nil’ return
- complete the ‘Employer – No return of Class 1A’ form for the tax year, to advise you do not have P11D to submit and no Class 1A returns to make
When do I need to file a P11D?
By law you are required to provide HMRC with details of expenses given to each director or employee after 5th April each year and before 6th July following the tax year in question.
For example, the P11D form for the tax year ending 5th April 2020 must be filed by 6th July 2021.
What happens if I do not file a P11D?
You may face a penalty based on a percentage of lost revenue if you do not submit the P11D form, or if you make mistakes on the form. Fines for late filings start at £100 per month per 50 employees.
What do I need to include on a P11D form?
The P11D form is used to notify HMRC about any employee expenses and benefits that don’t go through payroll. Therefore, you need to include the cash value of anything bought or paid for by the business that the employee benefits from.
P11D benefits might include:
- Gym membership
- Company cars (you can use this P11d calculator to calculate tax on employees’ company cars)
- Vouchers (including season tickets) which can be exchanged for money, goods or services
- Any loans
- Private medical insurance
- Living accommodation
- Non-business travel expenses
- Non-business entertaining expenses
- Assets provided to an employee that have significant personal use
- Self-Assessment fees paid by the company
Do reimbursed expenses need to go on a P11D?
The P11D form is only for benefits in kind, so an employee’s regular salary does not need to be included. Payments to employees to reimburse expenses such as off-site parking costs do not need to be declared either.
However, if you give an employee an interest free loan to buy a travel season ticket this should be included on the P11D form because it is a payment incurred by the business for the direct benefit of the employee.
Are there any PD11 exemptions for business expenses?
Most business expenses incurred personally by employees do not need to be recorded on a P11D form.
Exempt expenses include:
- Business Travel
- Business entertainment expenses
- Credit cards used for business purposes
- Fees and subscriptions
How do I submit a P11D form?
You can use your PAYE account to complete and submit a P11D form for each director and employee who receives a benefit from the business.
Who pays the P11D bill?
The employee will be taxed on any benefits they receive. This is usually deducted through the payroll with the employer paying HMRC directly on their behalf.
P11D benefits are also subject to National Insurance, which is paid by the employer, not the employee.
Do I need to give my employees a copy of their P11D?
You should give all employees a copy of the information submitted on their P11D form for their own records. If an employee is also self-employed on the side, they will need that information for theirSelf Assessment tax return. Employees can also request a copy from HMRC of the information you have submitted.
If you have any questions or need any assistance completing or submitting your PD11 form, please feel free to get in touch with us here at Wizz Accounting.