Do you receive or pay your employees’ or directors’ expenses or benefits throughout the year?
Then you must complete and submit a P11d form to HMRC for each employee who has received the benefits, as well as a P11d(b) to summarize the class 1A NIC due, as required by law.
Does all that sound like nonsense? If so, it does to many people, so you are not alone. The good news is that here we are going to explain this form in greater detail in this P11d guide, so it makes more sense (or as much sense as a government tax form can anyway.)
P11d Basics
The biggest question most people have, after what is a P11d is what goes on a P11d. The answer to the latter is any of the following:
- Any reimbursed expenses
- Any employment benefits that do not go through payroll, such as gym memberships or non-business related education.
- All business related entertainment expenses.
- Company car provisions and fuel reimbursements
- Any directors’ beneficial loans.
Some of these benefits will result in a charge to the company for Class 1A NIC; if any Class 1A NIC is due, it must be paid by July 19th (or 22nd for cleared electronic payment).
Statistical Details for a P11d Form
There are also certain standard statistical details that must be included on a P11d form:
- Your employer reference number
- Your employees’ full legal name
- Your employee’s NI number or date of birth, as well as his or her gender
- If you’re reporting a company car, include the list price.
- If you fill out the ‘total cash equivalent of car fuel provided,’ make sure to fill out the ‘total cash equivalent of cars provided’ as well.
- If you give a beneficial loan to an employee you’re reporting, fill out the ‘cash equivalent of loans’ section as well.
What Exactly is a P11d(b)?
A P11d (b) is a summary of your P11ds that shows the total amount of Class 1A NIC your company owes to HMRC. You must also submit a P11d (b) if you have one or more P11ds to submit
4 Steps to a Successful P11d (b)
- Enter the total cost of all expenses and benefits for the year.
- Adjust this total to account for expenses and benefits that do not require Class 1A NIC.
- Calculate your NIC for Class 1A.
- Make your P11d declaration in its entirety via a P11d(b)
Is it Possible to Get Rid of the Need to Submit a P11d?
It is possible to apply for a Dispensation if you are declaring certain benefits on a P11d for which no class 1A NIC is due, removing the need to report business expenses and benefits. Once the dispensation is in place, it will only cover the expenses and benefits listed on the dispensation application; there will be no need to fill out a P11d/P11d (b) for the expenses covered by the dispensation.
You’ll need to check the HMRC website to see if your expenses are eligible for a dispensation.
A Word About Company Cars and the P11d
One of the most common reasons for a P11d to be submitted is to report the usage costs associated with a company car. Obviously the type of car – and its age – will affect how it is taxed.
Despite the fact that you, the employer, will be the one to submit the P11D form, the employee will be the one to pay the tax bill. This is where the P11D becomes crucial for company car drivers.
Company car drivers should choose a car with a low P11D value and a low company car tax band to keep their tax bill as low as possible. As an employer, this is something you may want to point out when an employee is champing at the bit to get their hands on the newest ride available.
Although the term “P11D value” is not an official term, it is commonly used to refer to the value of a company car in the eyes of HMRC. The P11D value is the car’s list price, including VAT and any delivery fees, but not the first registration fee or road tax. The list price of the car, as well as the P11D value, will include any factory options installed.
Once you have the P11D value for a company car, multiply it by the percentage rate of the employee’s income tax bracket (either 20% or 40%) and the car’s benefit-in-kind tax band, which is based on CO2 emissions on models registered since January 1, 1998.
The same P11D value calculation applies to both new and used cars, so if you’re thinking about running a fleet of used company cars to save money, the P11D value and tax will still be based on the original list price. If there isn’t a list price to refer to, a notional price is used instead. This is the price at which the car’s manufacturer, importer, or distributor would have been expected to sell it.
When Do P11d (b) Forms Need to be Filed?
The P11d(b) form has a filing deadline of July 6th.
A penalty will be imposed if HMRC does not receive the return by July 19th. Each month (or part month) that a return is not filed will result in a penalty.
For each month/part month, penalties will be calculated at £100 per 50 employees.
You will receive one reminder from HMRC that your P11d is overdue if it is not received by July 19 – after that, you will only receive a penalty notification if your return is 4 months late. By that time you will have already incurred a minimum of £400 in penalties, so it is critical that you submit your returns by July 19 at the latest!
Need help with P11d forms, need a P11d guide or any other aspect of business accounting? Pearl Lemon Accountants can help. Get in touch today and let’s chat about your unique accounting needs and just how we can assist you.
FAQs
Who is responsible for P11D?
Employers. The employer needs to file the document rather than the employee. However, if you are a contractor, freelancer, etc., this also applies to you. Curious to know if you need to submit a P11d? Let’s chat!
Is P11D the same as P60?
No, they are not. The P60 lets HMRC know how much tax you have paid on your salary. The P11d reports the monetary values of benefits and expenses to HMRC.
Do I need to send P11D to HMRC?
If you pay or receive your directors’ or employees’ benefits and/or payments, then yes, you must complete the P11d form and submit it to HMRC.
The deadline to submit the P11d form is July 6th, and there is a penalty if the form doesn’t get submitted by July 19th.
Do I need to submit a P11D if no benefits?
A P11d is not required if you haven’t had any expense payments or if the employee has not received benefits.
Want to make sure you don’t need a P11d? Let’s chat!
