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Valuable information on P11D's

Colin Sharpe

Employee expenses and benefits – employer reporting requirements
If you’re an employer you  need to submit an end-of-year report to HM Revenue and Customs (HMRC), for each employee and director you’ve provided with non-business expenses or benefits in kind.  The report is made on a form P11d.

As benefits in kind effectively increase your employees salary, employers may also be liable to pay National Insurance contributions (Class 1A NIC) payable by 19 July each year.

Who needs to file a P11D?
P11Ds are filed by the employer, not the employee – although for many freelancers and contractors, that is one and the same.

When do you need to file a P11D?
Forms P11d and must all be filed by 6th July following the tax year in question. So, for example, forms P11D for the tax year ending 5 April 2017 must be filed by 6th July 2017.

What needs to be included in a P11D?
Generally speaking, expenses and benefits that need to be recorded include:
  • Company cars;
  • Private health insurance;
  • Interest free loans in excess of £10,000
  • Assets provided to an employee that have significant personal use (excluding mobile phones as long as contract is in employers name);
  • Personal accountancy fees paid by employer;
  • Non-business travel expenses (such as normal commuting to/from work);
  • Non-business entertainment expenses.
Recent changes to P11D
Prior to April 2016, expenses could be omitted from P11D forms by obtaining a special dispensation from HMRC. This has now been replaced by an exemption system, whereby the majority of business expenses incurred personally by company employees no longer need to be recorded on a P11D. Exempt expenses include:
  • Business travel (including subsistence costs associated with business travel);
  • Business entertainment expenses;
  • Credit cards used for business purposes;
  • Fees and subscriptions.
P11D Penalties
If you miss the deadline of 6th July (either online or on paper) HMRC will impose fines of £100 per month (or part month) per 50 employees.  If you submit incorrect forms P11d you could also face fines, unless HMRC believes your mistake was genuine and you can show that you took reasonable care before filing. Penalties of 30%, 70% or 100% of the owed tax can be applied if HMRC believe you acted carelessly, deliberately misled them or attempted to conceal  true liabilities.