What is a P11D and how does it work?
A P11D form is crucial for businesses providing non-salary perks to employees, such as gym memberships, company cars, or health insurance.
These perks, termed ‘benefits in kind,’ are items or services with monetary value, not strictly necessary for the job.
They are considered for taxable pay in PAYE deductions, hence requiring declaration. The P11D form reports these benefits to HMRC, helping calculate Class 1A National Insurance contributions.
Submission of this form is vital for payroll compliance in small businesses, ensuring accurate tax and National Insurance contributions for employee benefits.
What is a P11D(b) form?
A P11D(b) form is essentially a summary of all the individual P11D forms you’ve filled out for your employees.
It details the total amount owed from the various employee benefits reported on these P11D forms.
This form consolidates the information and helps in calculating the overall Class 1A National Insurance contributions due on the provided benefits.
When should P11D be submitted?
For the tax year 2023-24, businesses must electronically submit the P11D and P11D(b) forms by July 6, 2024.
This submission can be handled either directly by the business or through a payroll service provider.
The forms can be filed using either specialised payroll software or by accessing HMRC’s online PAYE service, ensuring adherence to the set deadline for reporting employee benefits.
Who needs to file a P11D?
Employers are responsible for submitting a P11D form for each employee who receives benefits in kind.
However, not all businesses are required to file a P11D. If no taxable benefits were provided during the financial year, or if tax on benefits is being paid through payroll (with benefits registered with HMRC), a P11D is unnecessary.
Still, a P11D(b) is needed for Class 1A National Insurance contributions.
Sole directors with no employees also need to file both P11D and P11D(b) annually, as they are considered both employer and employee.
Do you need to file a P11D form if you are self-employed?
Self-employed individuals, such as sole traders or freelancers, report their expenses directly on their self-assessment tax return. Therefore, they are not required to file a P11D form.
This form is specifically for employers reporting benefits in kind provided to their employees.
Are business expenses exempt from a P11D form?
Business expenses that are allowable, such as business travel, subscriptions, or the use of business credit cards, are exempt from being reported on the P11D form.
These types of expenses are typically considered necessary for business operations and do not fall under the category of taxable benefits in kind.
How do you submit a P11D form?
All P11D forms must be filed electronically now. Paper returns are no longer accepted by HMRC.
You can file online using HMRC’s PAYE online service or through HMRC-recognized payroll software.
Have your company’s name and address, employee names and addresses, the types of benefits provided, and their values ready for the submission.
This process ensures accurate and timely reporting of employee benefits for tax purposes.
What happens if you miss the P11D deadline?
Missing the P11D deadline can result in fines. HMRC may impose penalties of £100 per month for each set of 50 employees if the submission is overdue.
It’s crucial to adhere to the filing deadline to avoid these penalties.
What happens if you don’t have a P11D?
If you don’t submit a P11D, HMRC may issue a penalty notice. This is because the P11D(b) form declares the amount of Employer’s Class 1A National Insurance Contributions due on the benefits in kind provided to employees.
Failing to file it on time can trigger penalties from HMRC.
What do you do once you have filled your P11D?
After filing P11D forms, you must give each employee or director a copy of their respective form by July 6 of the year following the tax year it pertains to.
It’s also essential to maintain precise business records, including dates, specifics of the benefits provided, and any associated amounts paid.
Accurate record-keeping is crucial for compliance and future reference.
How is P11D tax paid?
The tax due on benefits reported on a P11D form is treated as additional employment income and is therefore taxable.
HMRC often collects this tax by adjusting your tax code to include the value of these taxable benefits, effectively collecting the due amount through future payroll.
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