P11D is a tax form which is filed by the employers to report HMRC about the extra benefits provided by them to their employees throughout the year.
These benefits are known as benefits in kind (BIKs) which are reward or incentives employees receives apart from the basic salary. As these benefits has some monetary value and hence, they are subject to tax.
What sort of Benefits are included in P11D?
Benefits-in-kind come in various forms. Some common examples you might report on a P11D include:
Private health insurance
Interest-free or low-interest loans
Season ticket loans for travel
Accommodation provided by the employer
Use of a company phone or gadget
Entertainment and travel expenses that aren’t work-related.
Non-business entertainment expenses.
Note: If it’s not a part of basic salary then it could count as a benefit-in-kind.
Exceptions or benefits excluded for P11D:
Statutory exemptions:
Travel and subsistence costs associated with business travel and travel to a temporary workplace.
Accommodation linked to business travel.
Fuel for business mileage in a company car.
Hire cars and related fuel costs for business use.
Business entertainment expenses.
Business credit cards.
Fees and subscriptions to HMRC-approved professional bodies.
Company mobile phones.
Business line rental at the employee's home.
Uniforms and tools for work.
Sundry business expenses like office supplies and stationery.
Trivial benefits:
Costs £50 or less to provide.
Not cash or a cash voucher.
Not a reward for work or performance.
Not part of the employee's contract terms.
Components of P11D form:
For filling P11D form, you need to include:
Employee Details: Name, National Insurance number, etc.
Specific Benefits Provided: Details of each BIK provided (e.g., car model for company cars).
Taxable Value Calculations: The calculated taxable value of each BIK using HMRC-approved methods.
Employee Benefit Information: Details of any employee contributions towards the BIK.
Deadlines for filling P11Ds
The deadline to submit P11D forms to HMRC electronically is July 6th following the end of the tax year. For example, for the 2023-24 tax year ending on April 5, 2024, P11D forms must be submitted by July 6, 2024.
Please note: Since April 2023, paper P11Ds are no longer accepted; employers must submit them electronically through HMRC's online portal.
Who needs to file P11D form?
Form P11D is filed by the employers. Moreover, depending on how businesses are setup certain self-employed freelancers and contractors might have to file them.
Conditions where P11D is required to filed:
Benefits threshold: Employer must file a P11D for each employee who received taxable benefits exceeding £1,000 during the tax year (April 6th to April 5th of the following year).
Company directors: Even if an employee earns less than £1,000 in benefits, employers must file a P11D if they are a company director.
Exceptions (employers not required to file P11D):
Benefits below threshold: If an employee received taxable benefits totalling less than £1,000 and they are not a company director.
Benefits already taxed through payroll: If an employer reports and deduct tax for certain benefits directly through payroll (“payrolling” benefits), they don’t need to include them on a P11D.
What is P11D(b) form:
Form P11D(b) summarizes all the benefits provided by the organization to the employee on a particular year, both payrolled, and recorded on P11Ds.
It also reveals to HMRC the total amount of class 1A National Insurance you must pay for all the benefits and expenses.
You need to file a P11D(b) if:
You’ve submitted P11Ds
HMRC requests a P11D(b)
You paid for employee benefits and expenses through their payslips.
Penalties for late filling of P11D:
For every full month that a P11D is late, HMRC automatically charges a penalty of £100 for every 50 workers (or portion thereof). There are additional fines for prolonged delays: Three Months Late: HMRC may charge an extra £300 per P11D if the document is still not filed three months after the deadline.
Six Months Late: An additional £300 per P11D penalty may be applied if the P11D is still unpaid six months after the deadline.
Future of P11D:
The need to disclose benefits on P11D forms will be eliminated by April 2026. Employers must confirm that the benefits integration procedure can be handled by their payroll software. Employers must take the initiative to update or improve their systems in accordance with this shift.
Conclusion:
The process of payroll benefits involves figuring out each benefit's taxable value and dividing it across the tax year's payroll periods. Employees and employers both benefit from this simplified tax process. Despite the fact that the new regulations won't take effect until April 2026, payroll benefits are currently available. Before the start of the tax year in which they want to commence payrolling, employers who desire to streamline their tax reporting procedures can register to use HMRC's payrolling benefits and expenses online service.
We here at Punchhole help you manage your payroll smoothly and more efficiently.
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