UK Tax: Completing P11D If You Provide Employees Taxable Benefits
Completion of Forms P11D
In order to comply with UK tax regulations, companies must fill out form P11D for all directors and employees who have received taxable benefits during the tax year (from the 6th of April to the 5th of April the following year). While the list of items that need to be reported is not exhaustive, it is essential that all relevant benefits are recorded accurately. Companies should also be aware that if no benefits or expenses have been provided, they must still complete form P11D(b) to declare this fact. This serves as a nil return for the tax year. HMRC can charge up to £3,000 per incorrect tax P11D form. Penalties can be applied up to 6 years.
Typical staff benefits are for example:
- Company Cars, Vans
- Petrol costs for non-business travels
- Medical Benefit
- Life Assurance or other insurance policies
- Loans including overdrawn loan accounts
- Subscriptions
- Home Telephones, internet
- Accommodation
- Credit Card purchases (for non-business personal use)
- Assets Given to employees.
Trivial Benefits up to £50
Trivial benefits do not need to be reported on form P11D, so that small, minor expenses do not need to be reported if they meet the follwoing requirements. Benefits that cost up to £50 can be ignored for both P11D and PSA (PAYE settlement agreement) purposes, as long as they are not a reward for current/past services, not specified in the employee's contract, not in cash/vouchers, and not part of a salary sacrifice arrangement. This caters to small expenses, like buying a box of chocolates on an employee's birthday.
However, there is a £300 annual limit per person for directors, officeholders of close companies, or members of their families. Individually, costs may be trivial and exempt from the P11D forms, however, when their total exceeds £300, P11D filing becomes necessary. It is important to note that even though taking staff out for a birthday pizza that costs up to £50 a head is acceptable, the same meal would be considered a benefit if it was presented as a reward for hitting certain sales targets, for instance.
Deadline
The deadline for submission is 6th of July immediately following the end of the relevant tax year.
The penalty for a late return is £100 per month/part month per each group of 50 employees. Where the continued non-submission of the return extends beyond 12 months, an additional tax geared penalty may be charged up to a maximum of 100% of the additional National Insurance due.
| Type of Mistake | Penalty range for Unprompted Disclosure | Penalty range for Prompted Disclosure |
|---|---|---|
| Careless | 0%-30% | 15%-30% |
| Deliberate not concealed | 20%-70% | 35%-70% |
| Deliberate & concealed | 30%-100% | 50%-100% |
Recent Changes
Starting from 6th April 2023, the submission of P11D and P11D(b) forms on paper will not be allowed by HM Revenue & Customs (HMRC). The forms can only be submitted digitally on the HMRC website or through a compatible software. It is important to note that the HMRC website can only accommodate the submission of forms for a maximum of 500 employees. For submissions exceeding that number, a specialized software will be required. Moreover, amendments to forms can now be digitally submitted instead of the previous paper-based mode. This implies that HMRC will respond more promptly to any revisions and amendments that are submitted. HMRC will no longer accept any paper submissions of either the original forms or amendments. Any paper submissions sent to HMRC will be rejected and either the employer or the agent will be notified of the rejection.
In addition, for the 2022/23 tax year, the company car tax rates have increased and there are differences in rates for cars registered before or after 6th April 2020. The rates are shown on HMRC's website and are frozen by HMRC until the 2024/25 tax year.(Note: there is a 4% supplement for diesel cars, excluding those that meet the Real Driving Emissions Step 2 (RDE2) standard, up to a maximum of 37%.).
Lastly, the official rate of interest for the 2022/23 tax year is 2%. When determining the benefit in kind for loans to employees at a discounted rate and the benefit in kind for the provision of accommodation, this is the rate that will be used. After 6th April 2023, the official rate of interest will increase to 2.25%.
