Employee benefits are an important consideration when it comes to attracting new staff, and reporting them accurately is equally if not more important for employers.
If you provide benefits to your staff, you may need to fill in a tax form called P11D.
What is a P11D form?
The P11D form is used for reporting benefits in kind to HMRC. These are benefits that directors or employees receive addition to their salary.
There may also be national insurance contributions (NICs) to pay, in which case employers need to submit a P11D(b) form.
Each type of expense is calculated differently, but here are some of the most common ones.
Company cars
Usually, you need to report company cars that are used for private journeys as well as business ones, and the fuel if you buy it for the employee.
Car benefit is calculated by applying an ‘appropriate percentage’, set by the Government, to the list price of the car.
In July 2019, the Treasury announced that for cars first registered from April 6, 2020, most company car tax rates will be reduced by two percentage points, before returning to planned rates over the following two years.
Plus, all zero-emission models will have no company car tax to pay in 2020/21.
These changes were expected to be rubber-stamped in the Budget that was initially planned for November 2019, but as this was cancelled ahead of the December election, they have yet to be confirmed and legislated for.
In some situations, you can use HMRC’s advisory fuel rates to work out employees’ mileage costs. These change every three months.
Health insurance
There are several exemptions that mean you don’t have to report certain types of medical insurance. These include:
- Salary sacrifice arrangements
- One health check per year
- Eye tests that are required by health and safety legislation
- Glasses or contact lenses if they are required for working with a monitor or screen
- Medical treatment outside of the UK
- Treatment or insurance for injuries that result from the employee’s work
- Treatment to help an employee return to work.
Anything that does not fall under an exemption has to be reported through a P11D form.
Childcare payments
If you provide childcare payments or vouchers worth more than a certain limit, you’ll need to report it on a P11D form.
This limit depends on the income tax rate of the employee you’re providing childcare for, but under current rules a basic-rate taxpayer can receive up to £55 a week or £243 a month in childcare.
For higher-rate taxpayers, childcare is limited to £28 a week or £124 a month, and for those paying the additional rate it’s £25 a week or £110 a month.
Employer-supported childcare below the exempt limit is usually tax-free and doesn’t have to be reported. There are also exemptions for workplace nurseries that meet HMRC’s criteria.
When do you need to file it?
The P11D form must be filed by 6 July after the tax year you’re reporting for. Then, if you have any class 1A NICs to pay, this must be done by 22 July.
Any PAYE tax or class 1 NICs that you owe on expenses or benefits must also be paid monthly through payroll.
What happens if you don’t file a P11D?
If you don’t manage to file your P11D or P11D(b) on time, you’ll incur a penalty of £100 per 50 employees for each month or part month it’s late. Plus, you’ll have penalties and interest to pay if you’re late paying HMRC.
If you’re not sure what you need to include on your P11D form or if you have any other questions, contact us to talk it through.
We offer an outsourced payroll service that covers employee benefits, alongside all your reporting and tax duties as an employer.