If you are running a business in the UK, filing a P11D form is one of the many payroll responsibilities that you have as an employer. 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 with HMRC. A P11D form is a document employers use to report benefits and expenses provided to employees or directors that are not included in their wages or salaries. These benefits and expenses include company cars, private health insurance, interest-free loans, and other non-cash benefits.
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.
At the end of each tax year, as an employer, you must provide HMRC with details about any employee or director to whom you have provided any of the above expense payments, benefits and/or facilities.
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 should receive a P11D form unless those benefits have already been processed through the PAYE scheme.
What kind of things will be included as benefits?
You should include in the P11D form all benefits received by your employees. This can encompass a wide range of benefits, such as –
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private health care
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company cars
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childcare
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private fuel paid
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professional memberships
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accommodation
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gym memberships
You’ll find a comprehensive list of the benefits you need to report on the HMRC website.
If you as the employer, chooses to ‘payroll’ some benefits of employees and tax them along with employees’ monthly or weekly pay, these benefits do not need to be recorded on a P11D form.
The forms must be submitted to HMRC by 6 July every year. In addition, employers are also required to complete and return the P11D(b), which calculates employer Class 1A national insurance contributions which is due on certain benefits.
A copy of the P11D form should also be given to the employee to enable them to complete their income tax return, review their tax deductions and/or allow them to prepare claims for tax relief.
How to submit your P11D form
Since 6 April 2023, P11Ds must be filed electronically. HMRC will no longer accept paper returns. You can either file online using the PAYE online service or report using payroll software that’s recognised by HMRC.
To do this, you’ll need the following information to hand:
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Company name and address
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Relevant employee names and addresses
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What the benefits are
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The value of the benefits
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:
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business travel,
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phone bills,
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business entertainment expenses,
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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?
Every tax year, the deadline for filing a P11D form is 6th July. 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. As of March 2023, HMRC no longer accepts paper P11D filings – all submissions must be made online. 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? Our experienced tax and payroll teams at Haines Watts are here to offer you all the support you need. We offer a comprehensive range of specialist services tailored to your individual circumstances.
Benefit from our expertise and ensure compliance with HMRC regulations and contact us today for personalised assistance with your requirements.
