A P11D is a statutory form required by HM Revenue & Customs (HMRC) from UK based employers to detail the cash equivalents of benefits and expenses that they have provided during the tax year to directors and employees who earn more than £8,500 per year.
If you run your own company then you may well be affected by the P11D rules and regulations if your directors or employees who earn more than £8,500 per annum (including expenses and benefits), enjoy the reimbursement of expenses that aren’t covered by a dispensation and, or benefits in kind that are paid either directly to them or to others, by way of, for example, employment of spouses or children.
When is a P11D required?
A P11D is required when benefits or expenses payments have been made:
- To an employee or director who has earned £8,500 or more in the preceding year, and
- To each director who has earned less than this amount, unless they are a full-time working director with no material interest in the company or a director of a charity or non-profit making organisation.
What sort of expenses and benefits are included?
- Company cars.
- Company car mileage allowances and fuel.
- Company vans provided for private use.
- Private car mileage allowances and fuel.
- Motorcycles provided for private use.
- Payments for use of home telephones.
- Mobile telephone usage and reimbursements.
- Private medical insurance.Subscriptions and professional fees.
- Non credit card expenses payments.
- Credit card expenses payments.
- Living accommodation.
- Interest-free and low interest loans.Assets transferred.
- Assets placed at the employee’s disposal.
- Working from home.
- Employer supported childcare.
- Other benefits or expenses such as childcare costs, spouse or partner expenses on business trips, late night taxis and so on.
If you are a director of a company and your company has provided benefits or expenses to either yourself or your employees, you’re required by law to provide details of these benefits to HMRC.
When any of these benefits in kind are supplied to either a director or an employee during the tax year, then the form P11D needs to be submitted for each person involved as well as a P11D(b) to outline the Class 1A National Insurance Contributions (NICs) that are due on the payments.
What doesn’t need to be included in a P11D?
The majority of business expenses incurred personally by company employees no longer need to be recorded from April 2016. Exempt expenses include:
- Travel (including subsistence costs associated business travel)
- Business entertainment expenses
- Credit cards used for business purposes
- Fees and subscriptions
Be wary of complex rules and regulations and forthcoming changes
P11D rules and regulations are complex, and just to make matters worse; the penalties applied for not submitting returns on time are hefty. It’s for this reason that it’s well worth your while keeping up to date with your obligations, particularly bearing in mind the host of changes that are due to come into effect both this and next tax year. Here’s an ‘at a glance’ overview of the changes that you should expect over the next couple of years:
- The disappearance of the £8,500 threshold (for the majority of employees or directors) and the abolition of the P9D.
- The introduction of the possibility of dealing with P11Ds through payroll.
- Changes in dispensation rules.
- The ability to report company car changes online.
- The treatment of trivial benefits.The exemption from reporting certain benefits.
P11D Submission deadlines
P11D information is collated up to the end of the tax year 16/17 and completed forms must be submitted to HMRC by 6 July 2017 – so that’s in exactly 2 week’s time!
Penalties will start to be applied if HMRC doesn’t receive your completed form by 19 July 2017.