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P11D Expenses and Benefits

What is a P11D?

A P11D is the form used by businesses to report expenses and benefits paid to directors and employees which have not been subject to PAYE. HMRC require your business to notify these expenses and benefits after 5th April each year by 6th July.

What is a P11D (b)?

A P11D (b) is the form that is sent in to HMRC with the P11D showing the amount of any additional tax or Class 1A National Insurance due on the expenses and benefits. Where no benefits have been paid during the tax year ending 5 April  and a form P11D(b) or P11D(b) reminder is received, employers can either:

  • Submit a ‘nil’ return
  • Complete the Employer – No return of Class 1A’ form, to advise  that they have no P11D to submit and no Class 1A return to make.

What type of expenses should be included on a  P11D?

Essentially taxable expenses and the cash equivalent of company assets provided for the private use of a director or employee will need to be reported on the form. Both are referred to as benefits in kind.

What are taxable expenses?

They are expenses which the business pays for but have a personal benefit to the employee. e.g gym membership or private healthcare payments.

The amount to declare on the P11D is the cost of the expense.

What are benefits in kind?

Where the business incurs costs or provides assets for the private use of an employee or director these normally result in a Benefit in Kind charge.

Where an asset is provided for private use, the amount to report on the P11D is the cash equivalent value –how this is calculated is dependent on the asset.

The following are examples of taxable benefits and expenses which you should tell us about:

  1. Assets paid for by the company and transferred to your employee at no cost or below market value e.g. Personal items paid for using company cheques or credit cards and money not refunded to company;
  2. Payments made on behalf of the employee e.g. paying personal bills from the business account or with a business credit card where these are not fully reimbursed;
  3. Vouchers (in the case of child care vouchers any excess over £55 per week ) or credit cards e.g. using company credit cards to fund personal expenditure;
  4. Living accommodation – the cash value of the living accommodation is regarded as a benefit;
  5. Mileage Allowance – amounts in excess of the HMRC approved rates;
  6. Cars, vans and/or fuel provided by the company and available for private use (in the case of vans incidental private use can be ignored);
  7. Low or interest free loans, often referred to as director’s loans ( where no interest is charged);
  8. Private medical or dental insurance paid for from the company account;
  9. Assets placed at the employees disposal, e.g. motorcycles, holiday homes;
  10. Professional fees, subscriptions – some subscriptions to professional bodies may be exempt;
  11. Training – only work related training is allowable and only if paid for or reimbursed by the company;
  12. Telephones and mobile phones – unless the contracts are in the business name.

For a full list of benefits read HMRC’s list of expenses and benefits

Does having a P11D mean the employee pays more tax?

There is  a requirement to report benefits in kind on the form and record these benefits of employment on their self-assessment return ( if they have one) and the benefits are taxable. Taxable benefits are normally adjusted by HMRC in their PAYE tax code to ensure that tax is collected throughout the year rather than ending up with tax underpaid at the end of the year.

If they do not complete a tax return HMRC will amend their tax code to collect the tax due.

What if the employee only has reimbursed expenses and no benefits in kind?

You will not require a copy of a P11D form as there are no benefits in kind to report.

The business, however, is still obliged to confirm to HMRC that there are no benefits in kind to report and no Class 1A National Insurance to pay as part of the P11D process.

What is Class 1a National Insurance?

Certain benefits attract additional National Insurance contributions (NIC); this is known as Class 1A NIC. It is an employer liability which is a cost to your business. It is calculated at 13.8% of the total value of any benefits liable to Class1A.

The Class 1A NIC is payable to HMRC by 19th July 2024 (in the case of 23/24).

How can I pay the Class 1a NIC?

As an employer you will be issued with a separate special payslip for paying the Class1A due or it can be paid via an approved electronic method. Please refer to HMRC website.

What if I have paid benefits but do not have a PAYE scheme?

You will need to register as an employer as as soon as possible as without a scheme you cannot submit a P11D and there are penalties for this being late.

Paying tax on your benefits though your payroll

You can deduct and pay tax on most employee expenses through your payroll (sometimes called ‘payrolling’) as long as you’ve registered with HMRC before the start of the tax year (6 April).

You do not need to submit a P11D form for an employee if you’re paying tax on all their benefits through your payroll.

You’ll still need to submit a P11D(b) form so you can pay any Class 1A National Insurance you owe.

Can we help you?

We can advise you on whether your expenses are benefits in kind and assist you with the completion of the forms. Please contact us for help.

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