If “complicated form names” was a category in the Guinness Book of World Records, HMRC would surely win. PAYE forms with titles such as P45, P60 and P11D, are especially puzzling although most people know the purpose of these forms is to inform HMRC everything they need to know about their income, expenses and benefits.
As the P11D deadline is just around the corner, in this article we will take a closer look at what it means, what’s on it, what has changed in 2016, when you file it and what happens if you don’t?
A quick note before we start; on HMRC’s website it mentions a form called the P11D(b). This is a form employers must submit summarising the individual P11D forms they have completed for their employees. See what we mean about puzzling form names!
What you need to know about form P11D
A P11D is a form employers use to report employee expenses and benefits for the previous tax year to HMRC.
Who needs to complete a P11D submission and what is reported?
Employers must submit a P11D for each employee or director who receives benefits in kind and earns £8,500 or more. Forms must also be submitted if directors own more than a 5% shareholding in the company.
Important: P11Ds are filed by the company/employer, not the employee. However, if you are a contractor or a freelancer, you may need to file one yourself.
Benefits in kind
Benefits in kind are items or services that employees receive (while performing their work duties) from the company in addition to any salary. Common examples of these are perks such as private healthcare, interest-free loans, or a company car. A form P11D allows employers to report these perks to HMRC. As such benefits effectively increase your salary, there may be NI Contributions to be paid on them. It’s important to note here that these contributions are paid by the employer, not the individual.
What needs to be reported?
For the most part, every perk you may have received from the business for 2014/15. Some examples of benefits in kind include:
For a comprehensive list of the types of benefits in kind which should be reported, have a look at the P11d form information on the government website.
How have the P11D forms changed in 2016?
Up until 5 April 2016, employers had to include details of business expenses they had paid back to employees on forms P11D. For instance, if your employee paid for bus ticket to travel to a client’s office and you reimbursed the employee for the ticket, you’d have to report the reimbursed expense on the employee’s form P11D. The employee would then go on to include this reimbursed expense when they filed their tax return.
However, from 2016/17 onward, any reimbursed expenses that HMRC considers as business expense, do not have to be reported on the P11D at all. Similarly, employees won’t have to report reimbursed expenses on their tax return for 2016/17 and beyond. If you have any doubt about this, please ask Alan on Twitter.
When is the P11D deadline?
Forms P11D and P11D (b) must be filed by the 6th of July following the end of the tax year in question. For example: Your P11D for the tax year 2014/15 must be filed on 6 July 2016.
What are the late filing penalties for 2014/15?
If you issue your form P11Ds late, you can expect a penalty of £100 per 50 employees for each month, or part of the month. However, you won’t incur these penalties straight away. You have about 14 days to get things right. However, should July 19 (for postal payments) or July 22 (for electronic payments), come and go, your company will incur the fines mentioned above.
In addition, if you are required to pay Class 1A National Insurance Contributions (NICs), and if you are late paying this amount, HMRC would look to accrue interest on this amount as well.
Got questions? Ask Alan
Got questions about P11D? Bradleys’ chief accountant, Alan McCappin, would love to hear them. He’s available on Twitter. Please feel free to contact him.