We look at the importance of P11D forms, what you need to include on it, when you need to file it and what will happen if you don’t fulfil your P11D duties.
The P11D form is used to report benefits in kind which are items or services which you (or your employees) receive from your company in addition to your salary, such as private healthcare, interest-free loans and company cars. The P11D form allows you to report, annually, these items to HMRC on your annual self-assessment return.
Benefits in kind effectively increase your salary so there may be national insurance contributions (NICs) to be paid on them, although it is important to note these contributions will be paid by the company, not the individual.
Who needs to file a P11D?
The employer, not the employee needs to file a P11D, although for many freelancers and contractors they are one and the same.
When should I file a P11D?
P11D filings aren’t dependent on your company year, and must all be filed by 6th July following the tax year in question. So your P11D for the tax year running 6th April 2022 to 5th April 2023 must be filed by 6th July 2023.
What needs to be included in a P11D?
Any item that the company pays for and that the employee benefits from need to be included. Expenses and benefits that need to be reported to HMRC are:
- company cars
- loans for rail season tickets
- other loans
- health insurance
- assets provided to an employee that have significant personal use
- self-assessment fees paid by the company
- non-business travel expenses
- non-business entertainment expenses
The majority of business expenses incurred personally by company employees no longer need to be recorded on a P11D form. Exempt expenses include:
- business travel
- business entertainment expenses
- credit cards used for business purposes
- fees and subscriptions
There are some key exemptions that it pays to be mindful of. For instance, directors’ loans. As a director, you don’t need to pay interest on the money you owe to the company – provided the loan is less than £10,000.
If your director’s loan account (DLA) is overdrawn by more than £10,000 at any point in the tax year, the Revenue will charge interest on the total overdrawn amount. This should be charged at the HMRC published rate of interest (2.25% for the 2021/22 tax year) and will need to be paid by the relevant director.
The overdrawn amount is effectively a loan from the business to the director, is treated as an employment-related benefit and must be included on the relevant director’s P11D Form.
- Submitting duplicate P11D information on paper where P11D information has already been filed online to ensure ‘HMRC have received it’. These duplicates can cause processing problems.
- Using a paper form that relates to the wrong tax year – check the top right hand corner of the first page.
- Not ticking the ‘director’ box if the employee is a director.
- Not including a description or abbreviation, where amounts are included in sections A, B, L, M or N of the form.
- Leaving the ‘cash equivalent’ box empty where you’ve entered a figure in the corresponding ‘cost to you’ box of a section.
- Not correctly completing the declaration on the final FPS/EPS submission (for those employers operating PAYE in ‘real time’) or the box in Part 5 of form P35 (Employers Annual Return) to indicate whether or not P11Ds are due.
- Where a benefit has been provided for mixed business and private use, entering only the value of the private-use portion – you must report the full gross value of the benefit.
- Not completing the fuel benefit box/field where this applies. This means an amended P11D has to be sent in.
- Incorrectly completing the ‘from’ and ‘to’ dates in the ‘dates car was available’ boxes. For example entering 06/04/2013 to 05/04/2014 to indicate the car was available throughout that year. If the car was available in the previous tax year, the ‘from’ box should not be completed and if the car is to be available in the next tax year, the ‘to’ box should not be completed i.e. left blank.’
HMRC will charge you a penalty if you file late or incorrectly. If you miss the deadline of 6th July, you won’t incur penalties straight away – you have approximately a fortnight to put things right and file your form. However if you reach the end of July and you haven’t filed your P11D form then your company will incur fines of £100 per month per 50 employees.