A P11d form is used to report benefits in kind given to employees. These are items that are given to workers on top of their annual salary and might include private health care, company cars or interest free loans amongst other things. As these extras could be considered an increase on a salary, they may be subject to tax. The P11d form is where these should be declared to keep you on the right side of the law.
July 6 is the deadline for changes to the way P11d forms are returned and could result in hefty fines for those that don’t comply: £3,000 for each incorrect form and £300 for each one that’s late.
The new rules made changes to dispensations, meaning you now have to declare any items belonging to the employee that are taxable.
Perhaps most importantly, when deciding whether an item is taxable or not, the liability lies with the company. If HMRC were to challenge the choice not to include something, it could result in a penalty charge. If you’re unsure as to whether an item falls in to the taxable category or not it’s best to seek professional advice or disclose the item on the form.
If you attend to settle liabilities on PAYE Settlement Agreements then you don’t need to list these on a P11d form. Likewise, you are excused from reporting expenses that are within the HMRC benchmark allowances or bespoke agreements.
A benchmark allowance is discretionary spending that might otherwise have been incurred at the employee’s expense, such as food and accommodation where an employee is away from their employment base, for example, a travelling salesman or a tradesman working away for a short period of time. A bespoke agreement is something that has been drawn up between employer and HMRC directly to agree a reasonable figure that can be given to staff members.
Understanding around this amongst companies seems to be minimal. This is likely due to the fact that information on the subject from HMRC has been relatively scarce but there are examples of retrospective tax, with interest and penalties, being claimed against some employers.
In order to avoid picking up unwanted fines, it would be advisable to review what you pay and provide to your employees. All of these must be listed on the form – then you can rest safe in the knowledge that HRMC has been supplied with all required information.