P11D forms are used to report benefits provided to employees outside of wages that constitute a benefit in kind – think a mobile phone for personal use, an interest-free loan, or health insurance.
Employers are required to report any benefits paid during the tax year and calculate the taxable benefit, normally resulting in an adjustment to the employee's PAYE tax code and a Class 1A National Insurance liability paid by the business.
You should complete a separate P11D for every employee or director who has received such benefits, plus a P11D(b) form summarising all P11D submissions, where you can calculate the NICs owing.
What to Include on a P11D Form
Most benefits need to be reported, but some expenses are considered allowable business costs, so they don't count as a benefit in kind. Those include business travel expenses, office supplies or materials an employee needs to do their job.
For example, travel expenses paid for staff to attend training courses are not a P11D benefit because this is a normal business expense, not a benefit offered to the employee. In contrast, if they are allowed to use a company car outside of working hours for personal use, this is a benefit in kind.
Taxable benefits include:
Living accommodation or relocation expenses
Interest-free employee loans
Health insurance plans
Car benefits or vehicles available for personal use
If you need help determining whether something is treated as a benefit in kind by HMRC, please contact SAS Accounting at any time for further advice.
Deadlines and Penalties for Late P11D Submissions
Employers must declare expenses and benefits up to the end of the tax year by the next 6th July and pay any liabilities arising by the 22nd July. The deadline for the 2022-23 tax period is 6th July 2023, with payments due by 22nd July 2023.
Note that deadlines for Class 1B NICs differ for employers with a PAYE Settlement Agreement, and where expenses are payrolled rather than submitted through a P11D, the tax and NICs will be paid through the normal payroll system.
Missing the P11D filing deadline can result in a fine of £100 for every 50 members of staff for each month or partial month the submission is late, plus interest and penalties on late payments.
HMRC can also levy fines if a P11D is inaccurate and they believe the mistakes were deliberate or due to carelessness.
How to Complete and Submit a P11D
There are two ways to submit P11D information; either through the PAYE Online for Employers portal or via your payroll software, provided it is compatible with HMRC requirements.
Businesses cannot use the interactive PDF form previously available, as this was retired after the end of the 2021-2022 tax year, and all submissions must be made online from 6th April onward.
If your benefits are payrolled, you don't need to submit a separate P11D. However, you must ensure you have registered the benefits through the HMRC online service to verify that the applicable taxes are being accounted for and paid through your payroll.
Employers must retain records for three years and will need these if asked to provide evidence of the benefits in kind or supporting information to show how they have calculated the benefit.
Common Problems With P11D Submissions
Because P11D deadlines are several weeks into the start of a new tax year, the typical issue is that a business forgets to file its P11D forms or misses the deadline. SAS Accounting will notify clients of upcoming deadlines or cut-off dates, but it makes sense to complete and submit figures sooner if possible to avoid the potential for a late filing penalty.
Other common issues include:
Calculating the taxable benefit incorrectly
Not providing the appropriate supporting documentation
Missing out elements of taxable benefits
Filing with HMRC without giving a copy to each employee
Employees must receive a copy of each P11D submitted by the 6th July deadline since their P11D form will notify them of any tax or NIC obligations owing and ensure they can raise any queries or verify that all taxable benefits have been reported on their behalf.
It is possible to make corrections to P11Ds post-submission, although it is highly advisable to work through the calculation process carefully to avoid any inadvertent errors.
If you would like further information about completing P11D forms, submitting your declarations to HMRC, or deciding whether an expense constitutes a benefit in kind, the expert payroll advisers at SAS Accounting are on hand to help.