If you offer taxable benefits in kind to your employees, you’ll need to file a P11D form for each member of staff or director receiving a benefit in kind.
This statutory form is used to report the cash equivalents of all benefits and expenses you offer to staff so that you can prove to HMRC that your employees can be taxed correctly.
All P11D forms must be filed by the 6th of July following the tax year in question. So, in July 2018, your P11D forms will apply to benefits and expenses granted in 2017/18.
HMRC will begin issuing penalty fees if they do not receive the completed form by 19th July so making sure you file you P11Ds in time is absolutely essential.
So which non-taxable payments and benefits should you be aware of?
Free or subsidised meals
Providing meals to employees on your business premises or canteen is often exempt from tax. These meals must be on a reasonable scale and available to either all staff or on a free or subsidised meal voucher basis for those for whom meals are not provided.
If you offer to cover the cost of late-night taxis for your employees for the journey from their home to work, this may be exempt from tax. As long as:
- this is not a regular occurrence,
- the employee was required to work both later than usual and until at least 9pm, and
- public transport has ceased by the time they finished work or it wouldn’t be reasonable to expect them to use it,
This will be an allowable expense. Covering the cost of an employee’s journey home will also be exempt if the member of staff would otherwise need to take two or more forms of public transport and at least one of these had stopped by the time they finished work.
Any smartphones and other mobile phones that you provide employees solely for business use (or with insignificant private use) is also exempt. The contracts for these devices must be in the company’s name to qualify.
However, if you offer employees money in order to use their own mobile phones for business use, this expense WILL be taxable.
This exemption applies only to mobile phones and smartphones, and does not extend to other devices such as tablets, iPads and PDAs.
Any other benefits that you offer costing less than £50 each are also exempt from tax, provided that:
- the benefit is not in the form of cash or a cash voucher,
- the employee is not entitled to said benefit as part of their contract, and
- the benefit is not provided as recognition for particular services carried out as part of the employee’s employment duties.
The exemption for trivial benefits for company directors, office holders, or members of these people’s households is capped at a total of £300 per tax year.
Delivering training as either a full-time or part-time aspect of employment qualifies for tax exemption. This could be either training provided internally by your company or run externally by a third party.
This exemption also stretches to cover other related costs such as employees’ travel to the course location, incidental overnight expenses, additional childcare costs, costs relating to examinations and registration of qualifications, as well as distance learning aids such as course materials and books.
Incidental overnight expenses
If your employees are required to travel overnight on business, any payments you make for personal expenditure up to a certain limit may be paid tax free.
The maximum amount you can pay tax-free is £5 per night for an overnight stay within the UK and £10 per night for stays outside of the UK.
Health screening and medical check-ups
As an employer, you may provide employees with one health screening and one medical check-up per year without paying tax on the costs incurred.
Eye tests are also exempt if they are required by health and safety legislation, such as for staff using computers or other screens. If the employee also uses a visual display unit, you can claim tax exemption on any glasses or contact lenses you provide them with.
Medical treatment can be extended to employees working overseas, provided you have already committed to covering these costs in advance. Should an employee be absent from work due to illness or injury for at least 28 days in a row, the cost of medical treatments to return to work up to a total of £500 would also be tax-free.
Pensions and other expenses provided on retirement or death
Other expenses incurred in the provision of things such as a pension, annuity, lump sum, gratuity or a similar benefit to an employee or their family in the event of their retirement or death is also exempt from tax.
This could also include the cost of general financial and tax advice made available to your employees.
Let us help
The deadline for filing your P11D forms is drawing near, so if you need any advice or professional guidance regarding what your company needs to do, speak to SMART Team today on 01202 577 500 or email firstname.lastname@example.org.