P11D (Expenses and Benefits)
The P11D is and Expenses and Benefits form that must be filled out by all United Kingdom employers and sent to the HMRC. The form is to report end-of-year cash-equivalents of expenses and benefits by employers, for employees and Directors who earned £8500 or more in that year – that’s including the adage of expenses and benefits in their cash equivalent. The form would also apply to freelancers and contractors.
The P11D is designed to let HMRC know about what they term ‘Benefits in Kind’. Basically services or items paid for by an employer as these benefits effectively increase an employee’s salary. As such, there may be National Insurance contributions to be paid on them (N.B to be paid by the company not the employee). Some common benefits are a company car, private health insurance, interest free loans from the company to the employee, travel and entertainment expenses, childcare and hotel accommodation. The form is broken down into 14 separate sections into which these and various other benefits are to be reported:
- Section A – Assets Transferred
- Section B – Payments made on behalf of the employee
- Section C – Credit Cards and vouchers
- Section D – Living Accommodation
- Section E – Mileage Allowances
- Section F – Cars and car fuel
- Section G – Company Vans
- Section H – Beneficial Loans
- Section I – Medical Health
- Section J – Qualifying Relocation Payments
- Section K – Services Supplied
- Section L – Assets placed at employee’s disposal
- Section M – Other Items
- Section N – Expenses Payment
As you might expect, there are of course financial penalties for late completion. If you miss the July 6th deadline you have a further two weeks to complete the required forms for each individual employee – so the 19th. If, after that you have still not submitted, your business will be subject to a £100 fine and will continue to do so every month per 50 employees. By November HMRC will then gently remind you it is outstanding with the accumulated £400 penalty. You may also incur penalties for an incorrect P11D form, although there may well be a degree of leniency, case depending, depending on whether you are deemed to have acted carelessly or deliberately to mislead on your liabilities. All this means it is important to be prompt and accurate when completing a form and you should request advice from a professional if required. Common mistakes are neglected usages – like credit cards usage that the company reimburses for – and incorrect data. It is essential you use the correct name, D.O.B, NINO and gender of an employee. It may be a simple mistake but it will result in a form being rejected and you may be subject to late fees. The same is true of a company car where the cash equivalent is necessary. Omission of any of this essential data will again lead to rejection. So be sure to keep accurate records in these key areas. If an error has been made, you can make an amendment in a paper form of a P11D, even if you submitted via a different method, stating that it is a correction form, filled out completely and posted to HMRC. As well as submitting a paper version for your original form, you can also complete a P11D using commercial payroll software, or by utilising one of the HMRC’s online tools found on their website.
If you need further information about completing the form, you can read our step by step guide which should help clear up any confusing parts or alternatively, drop us an email or call and we’d be happy to help.