19.4.2023 | Tax

Does your business need to file P11D forms before the deadline?

Head of Taxation at Beatons, Andrew Diver, gives an overview of the P11D and the action businesses should take to ensure compliance.

All businesses will be familiar with filing forms of one kind or another to HMRC, but the P11D can be overlooked.

However, it’s just as important as filing tax returns or communicating other financial information to HMRC.

What is a P11D?
A P11D form is the way a business declares to HMRC what expenses and benefits it has given to employees.

The deadline for submitting is July 6, and the information helps HMRC calculate how much tax and National Insurance is due for employees.

Who has to file a P11D?
Not every business will need to file P11D forms, but it’s likely that most will. If you’re unsure, please contact us for advice.

A P11D should be filed for each employee or company director that has received any benefit in kind in addition to their regular salary during the previous tax year.

It is not up to the employee themselves to report benefits in kind, but rather the employer who must inform HMRC.

A benefit in kind is anything of monetary value provided to the employee which is not deemed ‘wholly, exclusively and necessary’ to carry out their job. It is essentially anything given to the employee or paid for by the company which the employee benefits from, and the list is quite substantial.

What are examples of benefits in kind?
• Company cars owned or hired by the employer and made available for personal use, including:
– Fuel provided by the employer for private use
– Home-to-work travel costs paid by the employer
• Privately owned car expenditure or vehicle hired by director or employee including:
– Mileage allowance except where HMRC-approved rates are used
– Running and overhead expenses
– Licence, insurance, petrol, oil and repairs
• Speeding or parking fines
• Payment of expenses in connection with living accommodation
• Medical costs, including
– Private medical insurance premiums paid by the employer
– Specialist consultations
– Private medical or dental treatment
• Goods and services provided to employees below market value
• Vouchers
• Cheap or interest-free loans
• Cost of the gym or sporting facilities
• Home telephone or mobile costs in the name of the employee/director
• Private legal or accountancy costs
• Staff entertaining and cost of staff events where the total cost per head per tax year exceeds £150 (events must be available for all employees for the £150 limit to apply)
• Gifts to employees of wines, cigarettes, food and clothing.
• Other reimbursed expenses

Green cars and exemptions
Electric cars have a benefit in kind charge of 2% of their list price when new, compared to petrol and diesel cars, which have rates of up to 37% of the list price when new.

Some medical costs can also be exempt such as eye tests and the purchase of glasses when required for work.

Mobile phones provided by employers are exempt from benefits, but if you settle an employee’s contract, this will be a taxable benefit.

P11D penalties
Penalties for late submission are an initial £300 per P11D required plus £60 per day until submission. Penalties for incorrect forms P11D are a maximum of £3,000 per form.

It is also worth noting that historically more HMRC enquiries into employer payroll compliance and benefits in kind irregularities have been undertaken than any other form of direct tax enquiry, so the risk of omissions being identified is significant.

PAYE Settlement Agreement
Finally, in some situations, a business may wish to consider approaching HMRC to obtain a PAYE Settlement Agreement rather than submitting a P11D. This would mean the company settles any tax and NIC due. Examples of this relate to the provision of annual events in excess of the £150 annual event exemption or gifts of vouchers exceeding the trivial benefit threshold of £50.

If you need assistance from Beatons Group, email info@beatons.co.uk or call 01473 659777.