As an employer, you need to be aware of how to complete, and when to file, your employees’ P11D form which reflects the benefits that your employees receive over a given tax year.`The deadline for submission for P11D forms to HMRC is fast approaching, and if not submitted by 6th July, you will be penalised by HMRC.
Read Southside Accounting’s Employers Guide for P11D forms here – what you need to include, when you need to file a P11D form and the penalties imposed by HMRC if not doing either correctly.
What is a P11D form?
The P11D form is used to report to HMRC any services or items that you provide to your employees over a given tax year, outwith their salary.
Examples include company cars, private health care and interest free loans, such as for travel tickets. Collating this information on the P11D form means that you are also declaring this information to HMRC via the annual self-assessment tax return.
If you plan or already give additional benefits to your employees, please be aware that you are liable for any additional National Insurance Contributions (NICs), not your employees.
Who is responsible for filing a P11D form?
The P11D form completion is the responsibility of the employer rather than an employee, or if you are a freelancer or contractor, you will need to complete and file these forms yourself to HMRC.
When do I need to file a P11D form?
All P11D forms are due for filing for all companies by 6th July, after the tax year in question. For example, to file a P11D form for the 2018/2019 tax year, the P11D Form filing deadline is 6th July 2019.
If you are due to pay additional tax, you will need to do so by 22nd July.
What benefits do I need to include on a P11D form?
The rule of thumb is that for any items that are paid for by an employer that benefits their employees, need to be included on a P11D form.
See below a list of employee benefits that could arise:
- Company cars
- Loans for rail season tickets
- Other loans
- Health insurance
- Assets provided to an employee that have significant personal use
- Self Assessment fees paid by the company
- Non-business travel expenses
- Non-business entertainment expenses
Are there any exemptions available to me as an employer?
There is an exemption system currently in place with HMRC which came into force from April 2016, whereby business expenses incurred personally by an employee do not need to be included on a P11D fom.
These exempt expenses include:
- Business Travel
- Business entertainment expenses
- Credit cards used for business purposes
- Fees and subscriptions.
What happens if I file my P11D form late?
HMRC do give a two week grace period for late filings of P11D form submissions, whether you plan to submit online or paper. So the deadline to avoid a penalty for filing is the 19th July.
After the 19th July, you will incur a penalty of £100 per month for every 50 employees, up until November of the same year.
If HMRC have not received your P11D form submission(s) by November, they will send you a reminder, as well as confirming the penalty charge figure incurred up to that point, namely from 19th July to November.
Please be aware that HMRC will also impose a penalty if any part of the P11D form is incorrect. If you made a mistake in error, you can dispute the penalty, however, if you are found to have misled or have completed the P11D form carelessly, you could face penalties of 30%, 70% or 100% of the owed tax.
Some common mistakes to avoid
As a director, you will be aware that you can loan your company funds, and you will not be liable to pay any interest on the money the company owes to you, as long as the loan amount does not exceed £10,000. For any loan amount above £10,000, HMRC will expect you as the direct to pay interest on the total amount of the loan and the company will also need to pay Class 1A NICs on the interest payments at the current interest rate, which is 13.8% for the current 2019/20 tax year.
Directors’ loan accounts are viewed by HMRC as an employee benefit and therefore must be included on your P11D form and if there are interest payments to be made by a company on loan amounts over £10,000, a P11D form will also need to be completed (see below).
Use of personal phones
The cost of calls made by employees from their home telephone or personal mobile where the company has repaid the expense does not need to be included on a P11D form. Business calls however should be logged and reported to HMRC, so we would highly recommend a business mobile is provided to employees for ease of monitoring usage.
What is a P11D(b) form?
The P11D(b) form is a summary list of P11D forms completed for each employee, and so is only relevant if you have one more employees who you provide benefits in kind to, above and beyond their salary.
We can help
Southside Accounting can support you as a company director of a limited company, and can make sure you are paying the right level of tax and completing your tax filings correctly and on time.
Written by Shaima Todd.