What are P11D forms & When to use them : Ultimate Guide
P11D FORM GUIDE
A statutory form, P11D, is required by HMRC from all the United Kingdom based companies. The form provides details of the cash equivalents benefits and expenses that an employer provides its directors and employees during the tax year where earning is at the rate of more than £8,500 per year. The P11D form can be submitted to HMRC either as a hard copy or in an electronic format. The P11D has 14 sections, namely
Section A – Assets Transferred (cars, property, goods or other assets)
Section B – Payments made on behalf of the employee including description of payment
Section C – Vouchers and Credit Cards
Section D – Cash equivalent of living accommodation provided for employee, or household
Section E – Mileage allowance and passenger payments
Section F – Cars and car fuel (If more than 2 cars were made available, either at the same time or in succession, please give details on a separate sheet)
Section G – Vans and Van fuel
Section H – Interest-free and low interest loans
Section I – Private medical treatment or insurance
Section J – Qualifying relocation expenses payments and benefits
Section K – Services Supplied
Section L – Assets placed at employee’s disposal
Section M – Other items (including subscriptions and professional fees)
Section N – Expenses payments made to, or on behalf of, the employee
Any benefits that attract Class 1A National Insurance (NI) contributions are reported in brown colored boxes on the form. Click here to access the latest P11D form.
In the P11D form, the employer will have to mention the total value of any expenses, amenities and reimbursement that have been paid throughout the year to an employee, or their household. The most common examples include:
Additional employment benefits such as health insurance premium, Gym Membership fee etc.
Conveyance allowance and fuel benefits
Loans such as directors beneficial loan
Each employer must file a P11D form for every employee in the company along with another form – P11D (b). Four (4) Steps for the P11d (b) form:
Input total value of benefits and expenses provided to an employee during the year
Adjust this total for benefits and expenses where Class 1A NIC are not due
Compute the Class 1A NIC
Make declaration on P11d (b) form
When is the P11D DEADLINE?
The P11D forms must be filed with HMRC, each year, by 6th July following the last part of the tax year. Each employer must file a P11D form for every employee in the company along with another form – P11D (b). The P11D (b) form shows the amount of National Insurance (NI), if any, the employer has to pay on the benefits provided to the employees. NI payable on benefits is referred to as “Class 1A NI” which is reported in brown colored boxes on the P11D form.
Each employer is liable to issue a copy of the P11D form to the employee. Some benefits that appear on the P11D might incur additional tax or National Insurance for either the employer or the employee or both. Certain benefits that an employee has earned and which are not shown on the P11D form must be added to the earning. The employer must deduct pay-as-you-earn (PAYE) or NI or both, depending on the value of the benefit.
What are the P11D PENALTIES?
If an employer has not paid any expenses or benefits to an employee, unless the employer has informed HMRC that a P11d form is due via pay-as-you-earn, a NIL return can be submitted. As stated earlier, the filing deadline for the P11d form is 6th July. In case, the HMRC does not receive the form by 19 July a fine will be incurred. Penalties will accumulate for each month that a return amount remains outstanding. Such penalties will be computed at £100 per 50 employees for every month / part month.
Initially, the employer will receive a reminder from HMRC stating that the P11d is overdue if the payment is not received by 19 July. Post this date, the employer will receive a penalty notice when the return is 4 months overdue and the minimum accumulated penalty amount is £400. To avoid paying such a huge amount as penalty it is imperative to submit the form latest by 19 July.
What is the P11D EXEMPTION?
As an employer, certain routine employee expenses don’t need to be reported to HM Revenue and Customs (HMRC). These are referred to as ‘exemption’. Dispensations have been replaced by exemptions and employers can’t submit an application for a dispensation now. Employers don’t have to report certain business expenses and benefits like:
business entertainment expenses such as client dinners, team outings etc.
uniform and tools for work
To qualify for an exemption, the employer must either be:
paying a benchmark rate or a bespoke rate, approved by HMRC, to the employee as part of their earnings
paying back the employee the real costs
An employer should subtract and pay tax and NI on all expenses and benefits given to the employees, and inform about them to HMRC. Employers don’t need to apply for an exemption if they are paying HMRC’s standard rates or flat rate for permissible expenses. Employers only need to apply for an exemption if they want to pay bespoke rates to their employees.
P11D dispensation will not apply after 5 April 2016. HMRC was able to grant special consideration from reporting some expenses under section 65 and 96 ITEPA 2003. If an employer had agreed a bespoke rate with HMRC between 6 April 2011 and 5 April 2016 as part of their dispensation, the employer can apply to carry on using them. The employer can only apply the bespoke rates for upto 5 years starting the date they were approved.
P11d form needs to be filed for any company directors or employee who is earning over £8,500 per annum, or any company director possessing more than a 5% share in the company. P11Ds are filed by the business or the company, and not by the employee. For many freelancers and contractors it is the same thing. Most of the perks an employee received from the business in the previous tax year qualify as expense and benefits. There are 14 sections / line items on the P11D form. P11d forms must be filed by July 6th following the tax year in question. For example, the P11D form for the tax year April 2015 – April 2016 must be filed on July 6th 2016.
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