If you are a company director or have employees, at this time of year you ought to be considering P11Ds. These forms can get overlooked amongst the jumble of other, more well-known Revenue requirements like your monthly payroll, CIS returns and VAT returns. In this blog, we will review the basics of P11Ds to help you decide if they could be needed for your business.
What are P11Ds?
Your business might pay for expenses or assets that employees, including company directors, gain a personal benefit from. If this is the case, the financial benefit to the employee is reported to the Revenue on the form P11D. 13.8% of the total benefits must be paid to the Revenue as Class 1A National Insurance. The employee’s personal allowance is reduced by, thus causing the employee to pay tax on, the value of the benefit.
P11D requirements only apply to employees who would earn at least £8,500 if full time, and all company directors.
When is the P11D deadline?
P11Ds must be filed with the Revenue by the 6th July and any Class 1A National Insurance due must reach the Revenue by 22nd July (or the 19th July if you pay by cheque). There is a minimum £100 penalty if you are late.
You also need to give your employees a copy of their P11D.
How are P11D benefits calculated?
The financial benefit is almost always based on the amount the company has paid during the year to the 5th April. Car benefit is calculated as a percentage of the list price, and vans have a flat rate of £3,090 for the 2014/15 tax year (with an extra £581 added if fuel is paid for by the employer).
Common P11D errors
A motor vehicle that is available for private use creates a P11D benefit: just the availability – regardless of whether or not it is used – should be reported on a P11D. To make it clear to employees and the Revenue that vehicles are not available for personal journeys, you may wish to put a clause in employment contracts stating that company vehicles must not be used privately.
Some benefits don’t give rise to a National Insurance liability or change an employee’s tax code though they must still be reported to the Revenue. This category of P11D expenses covers items one wouldn’t necessarily consider to be a benefit and can consequently be overlooked very easily. Examples are business travel and subsistence reimbursed to an employee or director, or if a director/employee has used their personal credit card to fund business expenses and are subsequently been reimbursed for them. To avoid the administrative burden of calculating and reporting these expenses, you may apply for a dispensation (permission not to report these expenses) by using form P11DX.
If, on your final EPS/FPS payroll submission of the year, you indicated that P11Ds are due, you will need to file nil returns if you later discover no P11Ds are due.
We hope the above had been a helpful guide to P11Ds.