If you employ staff and you pay for their expenses and/or additional benefits, you are legally required to submit an annual P11D form to HMRC. The same also applies to company directors.

What is a benefit in kind?

Commonly referred to as 'benefits in kind', these are non-cash benefits which are not included as part of the employee/director's salary. They can include:

  • A company car/van or fuel benefits
  • Private health or dental insurance
  • Relocation expenses or living accommodation
  • Childcare vouchers
  • Subscriptions and professional fees

HMRC views these as being taxable benefits of employment and as the employer you may also need to pay Class 1A National Insurance Contributions (NIC) on them as well.

You will need to submit a P11D form for each employee/director who you have provided benefits or expenses to.

Deadlines for submitting P11Ds and paying any tax due

As an employer you have until 6 July following the end of the tax year to submit your online forms to HMRC. By the same date you must also notify HMRC of the total amount of Class 1A NIC which is due (using form P11D(b) and give all relevant employees/directors a copy of the information you have submitted on their P11D form.

You then have to pay any Class 1A NICs owing to HMRC before 22 July.

Penalties for late submission of P11D forms

If you fail to submit your P11D(b) form before the 6 July deadline, HMRC will issue you with a £100 penalty per 50 employees for each month or part month that your form is late. You may also be charged additional penalties and interest if you are late paying your Class 1A NIC.

You could also incur penalties for making an incorrect return or deliberately submitting false information. In these circumstances the maximum penalty is £3,000 for each form.

P11D record keeping

HMRC state that it is the employer's duty to keep up to date records of all the expenses and benefits provided to your employees/directors. These records should show accurate details relating to:

  • The details of every expense/benefit provide, including the date.
  • Information relating to the amounts you have stated on the end-of-year forms.
  • Any payments which your employees have made towards the expense/benefit.

You are also legally bound to keep these records for 3 years from the end of the tax year they relate to.

Expense exemptions

You do not have to report to HMRC all your employee business expenses and benefits, examples of what not to include are:

  • Their uniform or tools they use for work
  • Phone bills
  • Office supplies
  • Business travel and entertainment expenses

However, in order for these expenses to be covered by an exemption you, as the employer, must be paying a flat rate to your employee as part of their earnings, or you should be reimbursing the employee's actual costs.

We're here to help

If you are not sure what to include on your P11D forms, or what counts as an employee expense or benefit in kind, we'd be happy to advise you. Simply contact our head office on 0113 320 0001 or email office@dwco.co.uk.