P11D forms – all you need to know
P11D forms – all you need to know What are they for? Who are they for? Why do they matter?
If you are running a business in the UK, you need to familiarise yourself with the concept of P11D forms. These forms play a crucial role in ensuring compliance with HM Revenue and Customs (HMRC) regulations regarding the benefits provided to your employees.
Let’s look at some of the key points and provide you with all the essential information you need to know about P11D forms.
What is a P11D?
A P11D form is a statutory requirement that your business needs to fulfil. You have to file them with HMRC and provide details of the benefits you have paid to your employees and the cash equivalents of those benefits. Alongside the P11D form, you also need to file a P11D(b) and this needs to be filed whether the benefits are payrolled or not.
Who needs to complete a P11D?
As an employer, if you have paid benefits to your employees during a tax year, then you are required to complete a P11D form. The exception is if those benefits have already been subject to income tax and national insurance through the PAYE scheme. This process is known as "payrolling."
Who receives a P11D?
Your employees who have received benefits during a tax year and earned more than £8,500 should receive a P11D form unless those benefits have already been processed through the PAYE scheme.
What kind of things will be included as expenses and benefits?
You should include in the P11D form all benefits received by your employees. This can encompass a wide range of benefits, such as –
- private health care
- company cars
- childcare
- private fuel paid.
You’ll find a comprehensive list of the benefits you need to report on the HMRC website.
What is the purpose of P11D forms?
The primary purpose of the P11D forms is to calculate whether you need to be paying to HMRC any additional Class 1A National Insurance contributions. HMRC treats these benefits as additional salary, and as a result, the employee will be subject to additional income tax on the cash equivalents of these benefits, as if they had received them as salary. In the following tax year, the employee's tax code will be adjusted to account for the income tax due on the benefits received.
Any of your employees who submit a self-assessment personal tax return must include the benefits detailed on the P11D form within the employment income section and pay tax accordingly.
Exemptions and dispensations
While dispensations are no longer applicable, certain routine business expenses are exempt from being reported on a P11D form. These exemptions include business travel, phone bills, business entertainment expenses, and uniforms and tools for work. To qualify for an exemption, you must either pay a flat rate to your employees as part of their earnings (benchmark rate or special rate approved by HMRC) or reimburse their actual costs, ensuring that they receive no benefit from these expenses.
What are the deadlines for filing a P11D?
For the 2022/23 tax year, the deadline for filing a P11D form is 6th July 2023. You must also provide your employees with a copy of their P11D form by the same date.
What if you don't file or pay on time?
Failing to file the P11D form or pay on time can result in serious penalties. The P11D(b) form outlines the amount of Employer's Class 1A National Insurance contributions payable on the benefits in kind you provided. If you fail to file the P11D(b) form on time, HMRC will charge an automatic penalty of £100 for every 50 employees for each month or part month that the return is late after the deadline.
If the NIC due is not paid within 30 days after the due date (22 August), HMRC will add a 5% penalty to the amount of NIC due. This penalty increases to 10% after 6 months and 15% after 12 months. Additionally, HMRC will charge interest on late payments.
HMRC has the authority to request a penalty of £300 per P11D submitted late, which must be done through the First-tier Tax Tribunal (FTT). If the FTT agrees to issue such penalties, a further £60 per day can be charged until you rectify the situation.
What if you made a mistake?
Submitting a P11D or P11D(b) form that contains incorrect figures can be costly, even if it was filed before the July 6th deadline. The cost of the mistake depends on its nature and what steps you take to rectify it.
When HMRC discovers that a form you have submitted is incorrect, it will impose a penalty calculated as a percentage of the tax lost as a result of the error. Penalties for errors are charged on a sliding scale based on whether you or HMRC identified the mistake.
If HMRC has to prompt you to correct a mistake, the penalty charged will be higher than if you voluntarily inform HMRC about the error and take steps to rectify it.
Ensure compliance – avoid penalties
Understanding and fulfilling your P11D obligations is essential for every UK employer. By accurately reporting the benefits provided to your employees, paying the appropriate taxes, and meeting the filing deadlines, you can ensure compliance with HMRC regulations and avoid penalties. Make sure to stay updated with the latest guidelines from HMRC to ensure smooth and error-free P11D reporting
Are you looking for expert guidance on completing your P11D forms? Do you have any other tax-related questions? The experienced tax teams at Haines Watts Berkhamsted and Aylesbury are here to offer you all the support you need. We offer a comprehensive range of specialist personal tax services tailored to your individual circumstances.
Our Tax and Employment Benefits Advisor, Sara Simmonds, will provide you with the guidance you need.
Benefit from our expertise and ensure compliance with HMRC regulations and contact us today for personalised assistance with your tax requirements.
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