What is a P11D?26th April 2018 | Posted in: Payroll
What is a form P11D?
A form P11D reports any benefits in kind or non-exempt expenses payments received by employees, including company directors, and their families or household to HM Revenue & Customs (HMRC).
Who needs a form P11D?
A form P11D is required for all employees, including company directors, who have been provided with any such benefits in kind and non-exempt expenses payments.
What are benefits in kind?
Benefits in kind are items or services that employees, including company directors, or their families and household receive from their employer in addition to, or instead of a salary or wage.
The employees who receive any benefits in kind will pay income tax on the value of the benefits, unless the employer has a PAYE Settlement Agreement in place with HMRC whereby the employer will pay the tax due.
Common benefits in kind include:-
- Private medical treatment or insurance
- Private dental treatment or insurance
- Interest free or low interest loans of over £10,000
- Company cars and fuel
- Company vans and fuel
- Assets placed at the employee’s disposal
- Golf club or other sports club subscriptions
In short anything, other than remuneration in cash, that is paid for or on behalf of any employee, company director or a member of the employee’s or director’s family or their household. Note this does not apply if you are reimbursing business expenses or providing what are known as trivial benefits.
What are reimbursed business expenses that do not need reported on forms P11D?
Common exempt, routine expenses payments reimbursed by employers, that do not require to be reported on P11D’s include:-
- Business travel costs and associated subsistence costs
- Business phone bills
- Business mileage costs reimbursed at the HMRC approved rates
- Credit cards used for business purpose
- Professional fees and subscriptions per HMRC approved List 3
- Uniforms and tools used for work
- Business entertainment expenses
The exemption does not apply to expenses or benefits that are paid or provided under a salary sacrifice agreement. To qualify for an exemption, you must be either be:
- paying a flat rate to your employee as part of their earnings – this must be either a benchmark rate or a special (‘bespoke’) rate approved by HMRC or
- paying back the employee’s actual costs
You must have a system in place to check payments you make at benchmark or bespoke rates.
Your employees are not allowed to check their own expenses, so someone else within your business needs to do this to make sure they are legitimate. You must tell your employees to keep proof of their expenses, for example receipts or bills, in case you need to check them.
What is a trivial benefit?
It costs less than £50 including VAT per gift
- It is not cash or a cash voucher or a voucher that can be exchanged for cash. In other words the voucher can only be exchanged for goods or services
- It is not a reward for an employee’s work or performance
- It is not in the terms of the employee’s contract and the employee does not therefore have any entitlement to the trivial benefit
Examples of trivial benefits are:-
- a £50 Amazon voucher
- a bunch of flowers costing £50 or less
- a box of chocolates costing less than £50
Any of these or other trivial benefits could be given to mark the employee’s birthday or for Christmas or for any other personal significant events.
There is no limit on the number of trivial gifts that can be made to an employee unless he/she is the director of a close company (a company that is controlled by 5 of fewer shareholders), when the annual limit is £300, including any trivial gifts made to the director’s family members who are not employees or directors of the business. However please note that the abuse of the trivial benefits rules could lead to a challenge by HMRC.
In most cases, if trivial benefits are provided as part of a salary sacrifice arrangement, they will not be exempt.
What is the due date for forms P11D?
Any required forms P11D must be submitted online by 6 July following the end of the tax year. The tax year ends on 5 April annually.
You must give each employee a copy of his/her P11D by 6 July following the end of the tax year.
You must also submit a form P11D(b) online to HMRC by 6 July following the end of the tax year reporting the Class 1A National Insurance due by the employer on any benefits in kind provided to employees. The Class 1A National Insurance is due for payment by 22 July following the end of the tax year, unless you pay by cheque when it must reach HMRC by 19 July.
What are the penalties for failing to complete P11D’s on time?
HMRC will charge a penalty of £100 per month or part month that a P11D(b) is late.
HMRC will also charge interest and late payment penalties if the Class
If you would like to discuss anything about P11Ds with one of the members of our Tax Department, please call us on 0131 317 7377