An essential component of managing a small business's operations is handling legal and tax compliance. You have to know the forms you have to file, when you have to file them, and how to do it. You can be subject to fines for non-compliance if you choose to overlook this part of running your business.
If your company is located in the UK and you offer your staff benefits like cars, loans, memberships, and reimbursement for non-business travel expenses, you might have to report these benefits to HM Revenue & Customs (HMRC). Form P11D is to be used for this annual reporting.
What is a P11D form?
A P11D form is a document used to report all of the expenses and benefits that an employer provided to its employees in the previous financial year. This form must be submitted by employers annually. Using this data, HMRC calculates the employee's outstanding taxes and national insurance contributions.
Do I need to file form P11D?
Scenario 1: You pay expenses and benefits through your payroll
Some businesses use payroll software to report employee benefits and pay taxes on them all year long. You do not need to file P11D forms after the end of the year if you have paid all of your employees' expenses and benefits.
Scenario 2: You do not pay expenses and benefits through payroll
If you do not pay your employee expenses and benefits through payroll, you are liable to report them to the HMRC via Form P11D. You have to file a separate P11D for each employee before the deadline.
Scenario 3: You do not provide taxable expenses, payments or benefits to employees
If you do not pay any taxable benefits to your employees, you are not liable to file P11D forms to the HMRC.
Which benefits are to be reported in Form P11D?
The purpose of Form P11D is to capture all "benefits in kind" that you give to your employees. HMRC defines a benefit in kind as anything a company offers a director or employee that has a monetary value and is not 'wholly, exclusively, and required' for them to carry out their contractual obligations.
Put simply, it includes anything that your employees derive personal benefits from.
This includes benefits like-
- Company cars
- Mobile phone for personal use
- Non-business travel reimbursement
- Private health insurance
- Self-assessment fees paid by the employer
- Other assets provided for the employee's personal use
What is the P11D(b) form?
A P11D(b) form is used to declare the amounts of Class 1A National Insurance contributions you are due to pay for the year. This form has to be submitted in addition to P11D forms.
You must submit a P11D(b) to the HMRC even if you use payroll to collect taxes on your employee benefits and costs.
What is the deadline for filing form P11D?
The deadline for filing your P11D forms for a financial year is the 6th of July of the next financial year. For instance, the deadline for filing P11D forms for the financial year 2022-2023 was 6th July 2023.
Here is a summary of various deadlines related to reporting your employee benefits and expenses.
How to file form P11D?
P11D forms have to be submitted online as paper forms are no longer accepted. There are two ways of filing your P11D forms online.
1. Using PAYE Online
If you have fewer than 500 employees, you can fill up and submit your P11D forms through the PAYE online service. This is a service provided by HMRC. You will need to register your business online on the portal.
2. Using a commercial payroll software
You can also file your P11D forms through commercial payroll software. However, you must use software recognized by HMRC. Many recognized payroll software are available for free.
Check out this list of HMRC-approved payroll software options compiled by the UK Government.
Can you correct or change the P11D forms?
If you made a mistake while filing your P11D forms, you can file a correction form to rectify the error. The correction form can be filed online through HMRC’s PAYE Online service.
You can use the same correction form to inform HMRC about any changes to the data reported in the original form.
If you provide taxable benefits or expenses to your team members, you may be liable for filing P11D forms every year. If these documents are filed incorrectly, you risk underpaying taxes or overclaiming tax benefits. The government may impose fines and penalties as a result.