Ultimate P11D Form Guide
What Is a P11D Form?
P11D form has its own significance. P11D form is used to file extra benefits received by an individual from its company in addition to his or her salary. For ex – Interest free loans (to pay for train season tickets), company cars etc. You need to file this form annually to HMRC on your self-assessment tax return.
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.
These kinds of benefits received by you increase your salary to some extent and there may be national insurance contributions to be paid on them. Kindly note that these contributions are paid by the company & not by the employees. In this blog, we will study P11D form in detail so that everyone understands its use as well as importance.
The P11D has 14 sections, namely
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:
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 Dispensations have been replaced by exemptions and employers can’t submit an application for a dispensation now.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:
To qualify for an exemption, the employer must either be:
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 Exemptions For Certain Business Expenses
Before April 2016, expenses can be exempted from P11D form by obtaining special permission from HMRC. This system has been replaced by an exemption system where you will find the list of business expenses which are incurred personally by the employees of the company need not included in P11D form. List of exempt expenses are as follows –
- Credit cards used for business purposes
- Business travel
- Business entertainment expenses
- Fees & subscriptions
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.
Penalties For Late Filing P11D Form
The due date for filing P11D form is 6th July. If you will miss this deadline, you will incur fines & penalties from HMRC. Therefore, P11D form should be submitted to HMRC before the deadline. If you missed the deadline and even crossed the date of 19th July, your company will incur fines of £100 per month (or part month) per 50 employees.
In case you failed to file P11D form by November, you will receive a reminder along with the penalty amount from HMRC.
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.
You can also face fine in case of incorrect filing of P11D form. If HMRC believes that your mistake is genuine and you took proper care before filing P11D form to HMRC, you may not face any fines or penalties but if HMRC believes that you acted carelessly and the error is done by you to deliberately mislead them or to hide any information, you may be charged with a penalty of 30%, 70% or 100% on the owed tax from HMRC.
Common Mistakes in Form P11D
Home phone usage
You can exclude the amount of calls done by you from your home, telephone or personal mobile for which the company has repaid the expenses. Make sure to include each & every call done for business usage and keep the record for the same. Company mobile phone is recommended to resolve this confusion.
Keep your records up to date, pay attention to your accounts and identify the problem as early as possible so that you do not forget anything at the time of filing P11D form. If your accounts are correct & updated, you will not find any problem and can easily file P11D form before the deadline reaches.
Director’s loan accounts
If the company provides director a loan up to £10000, directors don’t have to pay any interest on it but if director’s loan amount exceeds the limit of £10000 at any time in the relevant tax year, director needs to pay interest at 2.5% on the total withdrawn amount.
The overdrawn amount will be considered as a loan from the company and needs to be included in director’s P11D form. In case, if you are paying interest on loan’s account, you also need to pay Class1 national insurance contributions on the interest payments at 13.8% (as per 2019-20 tax year). The company also needs to file form P11D (b) (summary of employee’s P11D forms submitted by the employer) to HMRC.
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 2019 – April 2020 must be filed on July 6th 2020.
P11D Form FAQ
Who Needs To File P11D Form?
P11D form is filed by the employer not by the employee. However, in case of many freelancers & contractors, they are one and the same thing.
When Do I Need To File P11D Form?
The due date for filing P11D form is 6th July. Example – For tax year starting from 6th April 2018 to 5th April 2019, the last date for filing P11D form is 6th July 2019.
What Needs To Be Included In P11D Form?
Any benefit (items or services) for which company pays his or her employee needs to be included in P11D form. Expenses & benefits that needs to be filed to HMRC are as follows –
- Loan for rail season tickets
- Company cars
- Health insurance
- Asset provide to an employee that have personal use.
- Self-assessment fees paid by the company
- Non-business travel expenses
- Non-business entertainment expenses
- Other loans
How DNS Helps In Filing P(11)D Form?
DNS Associates is one of the leading UK firm with more than 10 years of experience in advising employers about the expenses they have to include in form P11D.
For free consultation, you can call our DNS accountants at 03330602481 or e-mail us at firstname.lastname@example.org
Your Expenses and Benefits Partner – DNS Accountants
DNS Accountants is a proficient accounting and taxation firm that offers complete range of filing services for owner managed small business and private individuals across the United Kingdom. DNS has a sturdy track record of supporting small businesses with their wealth and manage them avail the maximum benefit. DNS is a reputed firm of ACA’s or Chartered Accountants (CA) with offices in across the United Kingdom. The firm’s learned team focuses on helping companies with P11d filings and other services such as self-assessment, bookkeeping and accounting services, business start-up, payroll-management and taxation advisory. The firm takes pride in saying that we are very co-operative with our clients & deliver unmatched customer service and constantly help clients to manage their wealth. At DNS, we are constantly in touch with our clients.
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DNS Accountants offers taxation & accounting services to owner managed businesses and freelancers / contractors. For business owners and freelancers / contractors, it is difficult to keep pace with the ever changing government regulations and rules. Our expert team of chartered accountants and taxation professionals help clients in services ranging from bookkeeping to payroll to tax planning, and filing tax returns.