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Understanding P11Ds: The Essentials for UK Employers

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Understanding P11Ds: The Essentials for UK Employers

P11Ds are essential tax forms for UK employers. They are used to report benefits in kind (BIK) and expenses provided to employees that are not put through payroll.

What is a P11D Form?

The P11D form is a statutory form required by HMRC from all UK employers. It is used to report specific expenses and benefits that an employer has provided to its employees (or to their relatives), which are not accounted for through the payroll system.

These could be anything from company cars, private healthcare, interest-free loans, to relocation expenses and more.

Why are P11Ds Necessary?

P11Ds are necessary because these benefits and expenses are taxable and, as a result, must be declared to HMRC. They also form a part of an employee’s taxable income, and failure to correctly report these benefits can lead to penalties. Also, there may be Class 1A National Insurance contributions to be paid by the employer on certain benefits.

How Do P11Ds Work?

Employers need to complete a P11D form for each employee to whom they have provided benefits or non-exempt expenses. They must also submit a P11D (b) form to HMRC, on which they calculate the Class 1A National Insurance due on the total value of all benefits provided.

The deadline for submitting P11D and P11D (b) forms to HMRC is 6th July following the end of the tax year to which they relate. The tax year runs from 6th April one year to 5th April the following year.

Once the forms have been submitted, HMRC will update the employee’s tax code to ensure that they pay tax on the benefits that they have received. The tax is usually taken from the employee’s salary or pension through PAYE (Pay As You Earn).

What Must Be Reported?

Generally, an employer must report any expenses or benefits provided to employees that are not included in their wages, and are not covered by a P11D exemption. This might include:

  • Company cars or vans
  • Private medical insurance
  • Interest-free loans
  • Accommodation
  • Relocation expenses
  • Certain gifts and entertainment

P11D Exemptions

Since 2016, certain “trivial” benefits, with a value of less than £50 each, are exempt from being reported. This includes things like a bouquet of flowers for a birthday or a meal out for a staff celebration.

There’s also an exemption for expenses that are fully ‘business-related’. These are expenses that an employee would be allowed to claim back as tax relief if they had paid them personally.

If you would like MPH Accountants to process your P11d’s then please do not hesitate to contact the Payroll team at payroll@mphaccountants.co.uk

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