National Insurance Contributions: Benefitting with Form P9D
Form P9D is particularly for those who earn less than £8,500* in a tax year. Through form P9D, they are required to report all the benefits and expenses. A person filing a P9D will not pay Class 1A National Insurance (NI). The P9D form must be submitted to HMRC by 6 July following the end of the tax year.
All the relevant categories displayed on form P9D must be completed including full value of benefits and expenses that have been paid to an employee in a tax year. All the expenses and benefits provided to an employee earning at the rate of less than £8,500 in a tax year, should be reported on form P9D.
Take a look at the benefits that are reportable on form P9D:
- Relocation expenses – exceeding £8,000
- Living Accommodation – except where it is exempt
- Payment of Pecuniary Liability – payments made on behalf of the employees by company i.e. personal bills of employee
- Vouchers – Any kind of voucher which can be exchanged for goods, services or cash
- Cash Convertible – The second-hand value of the asset
List of benefits that are not taxable for employees earning less than £8,500 in a tax year:
- Company cars, vans and fuel benefit
- Beneficial loans
- Private medical insurance
How to make the most of your benefits on a P9D
If earning less than £8,500 p.a. (a P9D employee) neither employer nor employee pay any NI contributions because Class 1A NI is not payable on benefits provided to P9D employees, even if those benefits are taxable.
Example: Rose works for six hours a week as a delivery driver, earning a salary of £3,120 p.a. She has a company car with a cash equivalent value of £4,000. Lucy earns therefore £7,120 a year (salary plus the car, a benefit in kind of £4,000). As her earnings rate is below £8,500, however, she is not taxed on the provision of her company car, as NI is not payable on benefits provided to P9D employees or directors, even if those benefits are taxable. There is no Class 1A NI liability for her employer either.
Also read about form P11D