It’s that time of year again when one payroll year reaches its conclusion and a new one begins with all the new thresholds and rates to learn. But while you’re looking ahead to the next year, you need to remember to file your final payroll reports by 5th April, prepare and send out P60s by the end of May and then P11D's by the 6th July.
“Wait. What was that last one? ... A P11-what?”
D! First of all, not everyone needs to file a P11D. It’s an annual form that employers need to file for directors and employees – one P11D per employee – who have received (jargon alert) taxable benefits in kind in addition to their salary. These benefits can include services like private healthcare and items such as a company car, and the P11D details the cash equivalent of these benefits. Effectively, the benefits are treated as increasing your salary – so there will be tax to pay, as well as National Insurance contributions (although any NI is paid by the company, not the employee).
As well as the examples given above, broadly speaking, anything that the company pays for that is given to the employee, who can then also use the service or asset privately needs to be included on a P11D form. Things like low interest loans, assets provided to employees that have significant personal use and any non-business travel or entertainment costs paid by the company.
The majority of business expenses incurred by employees and reimbursed by employers are now covered by an exemption system and no longer need to be reported on a P11D – such as travel and parking expenses, business entertainment expenses, and fees and subscriptions. There are lots of online resources about what to include and what not to include – or you can always ask your accountant!
P11Ds are filed by employers, not the employees themselves – and they need to be filed by the same date each year – the 6th July following the tax year in question (make sure it’s in your calendar). So, as an example, P11Ds for the last tax year (April 2017 – April 2018) need filing by the 6th July 2018.
Like many other situations HMRC can get cranky if P11Ds are filed late or incorrectly. If P11Ds are excessively late, the gloves come off and companies could be looking at fines of £100 per month per 50 employees. If you make a mistake, and HMRC believe it’s a deliberate attempt to mislead them, then again, penalties can be charged. So take good care to include anything that needs to be included before filing. If you do that, then any genuine errors should be looked upon a lot more leniently. At Change we send our clients a checklist, so they have proof that they considered all transactions.
If you’re a director with something like a company car, or have employees and pay for their private health care, and think you may need to file P11Ds, it’s a service we provide here at Change, so if it turns out you do, give us a call and we’ll be happy to quote for the service.