Are you wondering what is a P11D form and how to use it? As an employer, you might need to go through the complexities of the P11D form and its different variations like P11D(b) and when and how to use them. In this blog, we will guide you about the P11D form and who can use it and when it should be submitted. This will help you manage your taxation and avoid penalties levied by the HM Revenue & Customs (HMRC) in the United Kingdom.
So, let’s dive into this discussion and get everything in detail!
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What is a P11D From?
Every employer in the UK is liable to pay some ‘kind Benefits’ to their employees and directors. This benefits-in-kind are reported to the HMRC for claiming the tax benefits and for paying the National Insurance Contributions (NICs) on these expenses or benefits.
Benefits in kind is compulsory for the employers to be paid to their employees and directors to fulfil their responsibilities that are part of their contract. However, HMRC requires all the details of these benefits to provide correct tax code facilities for the employers.
Similarly, P11D(b) form includes a breakdown of all the P11D forms submitted at the end of a tax year and includes the details of all benefits provided to the individual employees.
What are the Benefits in Kind (BIK) or the Fringe Benefits?
Benefits in kind are important as it helps the employees get additional benefits apart from their salaries. These benefits can be taxed or they can be taxed-free by the HMRC. It all depends on the use of these benefits.
Suppose, you are providing a vehicle to your employee for the purpose of carrying out business activities like business travels and trips. In this case, it is not a Benefit-in-kind or a fringe benefit. Instead, if you have provided a vehicle to your employees and directors for their personal use, it will be considered as a kind benefit. Other examples include:
- Medical Benefits
- Vehicle or Fuel Charges
- Personal Travel Expenses
- Assets of personal Significance
- Mobile Phones
- Childcare Benefits
And the list goes on. Next, we will discuss only those benefits that are part of the P11D form.
Expenses Included in the P11D Form
The following expenses by the employer or the benefits provided to the employees or the directors are mentioned on the P11D form as they are the business expenses by the employers.
- Assets that have significant personal use
- Car fuel
- Company cars and vans
- Directors’ loans above £10,000
- Health and dental insurance
- Non-business travel expenses
- Child Care Benefits
- Mobile Phones
Besides, there are other expenses provided as benefits that are exempt from tax.
Following is the list of those fringe benefits that have been exempted from the P11D requirement. This list includes
- Subscription Plans
- Travels for the purpose of a business
- Benefits up to £50.
When the P11D form Should be Submitted?
P11D form is required to be submitted by the end of every tax year. It is submitted on an annual basis and needs to be submitted by the 6th of July every year. It is not related to the tax year followed by the company’s tax year. For example, if the company tax year ends on the 6th of May 2021. The P11D would not be submitted by the 5th of May in 2022. Instead, it should be submitted by the 6th of July of 2022.
Penalties By the HMRC
HMRC is entitled to penalise you for the wrong information and for delayed submission. So, it is necessary you submit accurate, up-to-date and complete to the HMRC in your P11D form. Any missing or incorrect information can make you liable to pay a high penalty fee to the HMRC.
Therefore, you have to pay a penalty fee of £100 for the late submission of the P11D form. However, you get additional 15 days after the due date to submit the P11D form as HMRC understands the possibility of unavoidable circumstances for the delayed payment by a company.
On the other hand, you also have to pay the 100% of the complete owed tax in case you make serious mistakes in your form. So, you need to be careful in the submission of the P11D form.
How to Submit P11D Form Every Year?
You can submit P11D at the end of every tax year using the HMRC PAYE Online Service or commercial software. Besides, you can download the P11D form and submit it to the HMRC via post.
However, if you are paying taxes on all the benefits provided to your employees and directors and it is a part of your payroll.
The Bottom Line
In conclusion, the P11D form is not as difficult as it seems for many employees. You need to follow a thumb rule of paying taxes on all the expenses or NICs if the benefits are for the personal use of the employees rather than for business purposes.
On the other hand, the P11D form needs to be submitted by the end of 6th July every year. Any negligence in the submission of details and any delay in the P11D form submission could cause you to pay a heavy fee as a penalty.
Last but not least, only employers are required to pay the P11D form. So, if you’re a freelancer, contractor or self-employed person without hiring any other person, you do not need to submit the P11D form. I hope this article provided you with details on what is a P11D form and you can manage it accurately.
Disclaimer: All the information provided in this article on What is a P11D form, including all the texts and graphics, is general in nature. It does not intend to disregard any of the professional advice.