What is a P11D?

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Red tape is one of the biggest headaches and drain on your resources you can have as a business owner.  P11d forms are just another one of those instances where unless you know about it could land you in trouble.  You didn’t get into business to fill forms but there are a lot of things you will not know about.  That is why we are here to answer the question what is a P11d and stop you from getting bitten on the backside.

What is a P11d?

See that lovely looking form above?  Well that is a P11D form and that is just one page.  That is right the P11D form has two pages per person that need completing and then there is the P11D(b) form that is also required by HMRC each year.  We know you just love filling in forms for a living so download your own copy P11D Form

A P11D is a form that by law you must send to HMRC each year providing HMRC with details of any expenses or benefits paid to employees and Directors that have been earning at a rate of more than £8,500 in the tax year.
The purpose of the form is to calculate any personal tax and employer national insurance due on payments not recorded through the normal payroll process.

P11D items that require reporting

  • Assets transferred to employees or Directors
  • Payments made on behalf of employees
  • Vouchers and credit cards (company credit cards)
  • Living accommodation
  • Mileage allowance
  • Cars and car fuel
  • Vans and van fuel
  • Interest-free and low interest loans
  • Private medical treatment or insurance
  • Qualifying relocation expense
  • Services supplied
  • Assets placed at employee’s disposals
  • Subscriptions and professional memberships
  • Expense payments made to, or on behalf of, the employee

For more detailed guidance on what is covered by the items listed above please refer to HMRC website.

Wow what a great big list that is that you need to worry about.  Worried now?  That’s right there is probably something on that list that you have been doing without thinking about the tax and national insurance requirements.   Are you even recording your business transactions in such a way to easily extract the data needed to complete the P11D form?  As you can see from the list above there is pretty much no way if you are compliant that you can provide staff with anything without tax and national insurance being due.  Paying benefits in lieu of salary does have the added advantage of no employee’s national insurance being due.  There are many salary sacrifice schemes available that could aid this.

P11D deadlines

All P11D’s have to be filed with HMRC before the 6th July following the tax year end of 5th April unless you have a dispensation.

P11D forms can be filed in paper form or depending on the number of forms involved there are many commercial software houses that provide a P11D solution.  If you run your payroll in-house check with your payroll software provider as they will usually have a P11D module available.

Payment of the employer’s national insurance due which is calculated on your P11D(b) form will need to be with HMRC by the 19th July following the

A copy of the P11D will need to be provided to employee’s as they will need this information to complete their self-assessment tax returns.

P11D dispensation

The best way to avoid having to file a P11D form is to try and avoid it all together.  This can be done if you are eligible for a dispensation from HMRC.  A P11D dispensation removes the need for organisations’ to complete P11Ds for specified employees or employee groups. This also removes the need to pay tax or NICs on items covered by a dispensation.

How do I get a P11D dispensation?

In order to be eligible for a dispensation there are two conditions that need to be met;

  • There is no tax liability for that expense payment or benefit
  • You have a robust system in place that ensures that no payments break the terms of the dispensation

Expenses such as business travel and entertainment and fuel for company cars can be covered by a dispensation.  Items such as company vehicles, private medical insurance and mileage expenses do not qualify.  Once gained, a dispensation is reviewed at intervals not exceeding 5 years.  This means that you may be able to exclude employees altogether with a dispensation but for others it may just be a case of excluding the expense payments and benefits that are now covered by the dispensation.

To apply for a dispensation use P11DX

If you are still concerned about any of the issues raised in this blog please do not hesitate to contact us.  Smart Accountancy Systems Ltd is in a position to help you with any P11D completion, P11D dispensation and implementing robust expense systems to avoid the problems highlighted above.

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