Many forms need to be submitted at the end of a tax year and keeping them all straight when you’re just starting in business can be a difficult task.
One of these forms is a P11D and this is used to document expenses and benefits paid to an employee.
In this article, we will look at the P11D in more detail.
What Is The Purpose of A P11D Form?
A P11D form is a document that reports any taxable benefits and expenses paid to employees in a tax year.
A P60 is used to report the salary of an employee and a P11D is used for other items, such as fuel allowances, living expenses, or vouchers.
It needs to be submitted to HMRC every year if an employee has received any of these extras.
If an employee has received these additional benefits, it may mean that additional National Insurance Contributions (NIC) need to be paid and this can also be notified on the P11D.
The P11D is filed by the employer, not the employee. If you run HR software or use a payroll provider, either will be able to generate the P11D form for the relevant employees.
If you submit a P11D form for an employee, you should also give them a copy so that they are informed of their benefits.
When Does A P11D Need To Be Submitted?
As with P60s and other payroll items, a P11D covers a tax year from the 6th of April to the following 5th of April.
P11Ds are part of an employer’s End of Year duties but employers do have some time to get the documentation.
Employers should file any P11Ds before the 6th of July of the tax year in question.
For example, a P11D for the tax year 6th of April 2022 to the 5th of April 2023 would need to be submitted by the 6th of July, 2023.
Any additional Class 1A NIC needs to be paid by the 22nd of July.
What Needs To Be Included On A P11D?
In general, you need to include any item or expense that the company pays for and the employee benefits from on a P11D form.
Some of the most common expenses listed on a P11D include:
- Company cars
- Fuel provided
- Payments for private health insurance or medical treatment
- Living allowances
- Relocation expenses and benefits
- Transfer of assets to the employee
- Vouchers and credit cards
- Loans and interest payments
This is a non-exhaustive list and specific details of what should be included and how amounts are calculated are available on the HMRC website.
P11D Exemptions For Some Business Expenses
HMRC has an exemption system that allows some business expenses that have been incurred by employees to no longer need to be declared on a P11D form.
This exemption covers a large number of expenses and means that they don’t need to be reported to HMRC.
Items typically included by this exemption include:
- Professional fees and subscriptions
- Travel for business
- Business entertainment expenses
- Business credit cards that are used for business purposes
It’s important to check if any benefits paid to company employees are covered by this exemption system as it will reduce their tax and NIC liability.
Penalties For Late Filing Of A P11D
We stated earlier that P11Ds need to be filed by the 6th of July following the end of the tax year, so what happens if you file a P11D late, either online or on paper?
HMRC charges penalties and fines for late filing of other payroll documents and filing a P11D is no different.
They do give a short grace period of a couple of weeks, however, so there’s no need to panic if you’re only a couple of days late.
Once that grace period is over, the penalties will start to accrue.
HMRC will charge the company £100 per month (or part of a month) for every 50 employees your company has.
This means that even if you are late with your P11Ds, it will still benefit you to submit them as soon as you can as the longer you leave them, the higher the penalties will become.
It can also become very expensive very quickly if you have a large company with a lot of employees.
If November rolls around and the P11Ds still haven’t been filed, then HMRC will send you a reminder letter.
This letter will also include the details of the penalties currently outstanding.
They will continue to accrue until the P11Ds are finally submitted.
Penalties For Incorrect Filing Of A P11D
Mistakes can easily be made when filling in forms such as P11Ds and HMRC won’t necessarily punish your company if they discover a mistake was made.
You will need to pay any additional tax or NIC owed, but HMRC will only charge penalties if they believe the mistake was intentional.
If HMRC believes the mistake was genuine and that the company took reasonable care when completing the forms, there may not be any fines levied at all.
However, if HMRC believes the mistake was deliberate and steps were purposely taken to mislead HMRC, they can charge penalties of up to 100% of the owed tax.
What Is A P11D(b)?
When researching and submitting a P11D, you may also find references to a similar form named a P11D(b).
This form acts as a summary of the individual P11D forms that you have submitted and completed for your employees.
You will need to submit this form, too.
How Is Any Additional Tax Collected?
If your employee needs to pay any additional tax because of benefits reported on a P11D form, this is usually taken from their tax code.
HMRC will adjust the employee’s tax code to recover the additional tax and send their new code to the company so it can be implemented.
Final Thoughts
A P11D is a form submitted by employers that details any benefits and expenses paid to an employee during a tax year.
The employee should also get a copy and it needs to be submitted by the 6th of July following the end of the tax year.
