What is P11D Form? Everything You Need to Know

For employers, filing P11D forms on time and correctly is an important part of reporting to HMRC each year. HMRC wants all companies based in the United Kingdom to give each employee and director a P11D form so they can list any benefits in kind they received during the year. To send in your P11D forms, you can use either commercial software or the PAYE online service. In this blog, we’ll talk about everything you need to know about P11D forms, such as how to file them, what expenses qualify, and the most common mistakes people make when filling them out.

What is a P11D form?

As an employer, you’ll usually need to send HM Revenue and Customs (HMRC) a P11D form at the end of the tax year for each employee or director you’ve given expenses or employment benefits in kind to.

You need to know about two different kinds of P11D forms. These things:

• On the P11D form, you list the benefits in kind that each employee and director got.
• The P11D(b) form is where you put a summary of all the P11Ds you’ve sent in. It tells HMRC how much Class 1A National Insurance you need to pay for all the expenses and benefits you’ve given. It lists all of the in-kind benefits that the business has given.

Who should fill out a P11D form?

Any employee or director who has received a benefit in kind must have a P11D form filed by their employer. You will also need to fill out this form if you are a company director or self-employed. Each director or employee who needs to fill out a P11D must fill out their own form. You don’t have to fill out a form if you don’t have any taxable benefits in kind to report.

What are the benefits in kind?

Benefits in kind (BIK) are non-cash benefits or perks that you give to employees or directors on top of their salary or wages. These are taxable benefits, so people may have to pay income tax on them. As an employer, you may also have to pay National Insurance Contributions (NIC) on them. They must be sent to HMRC every year.

How do I report a benefit in kind and pay tax on it?

As an employer, it is your job to make sure that any directors or employees who have received benefits in kind report them. The employer sends a P11D form and a P11D(b) summary report to HMRC in order to report.

By July 6 of the year after the tax year in which the benefits were given, these forms should be sent to HMRC. For example, if an employee got BIKs from April 6, 2022, to April 5, 2023, the deadline for the P11D form would be July 6, 2023.

The form has a list of all the possible taxable benefits. The employer chooses the ones that apply and writes down the value of the benefit given to the worker. The worker should also be given a copy of this form.

What are taxable benefits?

Benefits in kind are things that are given to people that aren’t part of their taxable income but still help them out in a big way. Many of these benefits are worth a lot, and by taxing and paying NI on them, HMRC stops employers from cutting salaries and adding expensive benefits to make up the difference, which would save tax and NI.

Some of these benefits are listed below, but this is not a full list. On the website for the government, you can find a full list.

• company cars.
• mileage allowance payments.
• car fuel benefit.
• vans and van fuel.
• private medical treatment or health insurance, including dental insurance.
• low or interest free loans, often referred to as director’s loans.
• interest-free loans to employees for things like rail season tickets.
• vouchers that cover things like childcare costs (childcare vouchers over £55 per week).
• living accommodation.
• relocation expenses.

What doesn’t need to be included on a P11D?

Some expenses aren’t taxed, so you don’t have to list them all on your P11D. Some of these things are:

• office supplies.
• business travel expenses.
• stock and materials.

Do employees have to pay income tax on things they get for free?

The benefits in kind that employees get will be taxed. This is usually taken out by employers and paid out over the course of the year.

How are benefits in kind taxed?

Benefits will be taxed by both the employer and the worker. The employer pays National Insurance Class 1A, and the employee pays income tax.

Any benefits reported annually on a P11D form should be reflected in an employee’s or director’s PAYE tax code to make sure that tax is collected throughout the year and not left unpaid at the end of the year.

Conclusion

It is essential to submit your P11D forms and P11D(b) forms in a timely manner and with precise information if you want to avoid penalties and problems with HMRC. The process of reporting benefits received in kind can be difficult because there are so many different things that could be considered to constitute such benefits. You, as the employer, are responsible for ensuring that the information you provide on these forms is accurate.