A fully electric car was provided to a director in 2020/21, so the benefit in kind for 2020/21 is £0 (1% multiplier from 2021/22) - no other BIK were provided to any other employee in the year.
Would I be required to submit a no return of Class 1A form, or should I file actual P11D forms since a benefit in kind was provided, despite there being a nil liability ?
I assume the latter, but would be grateful if someone could assist.
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Yes, I think you should submit a P11D showing a nil benefit.
A form P46 Car (or electronic equivalent) should have been submitted when the car was first supplied, so HMRC will be expecting a P11D for 2020/21.
Also, the submission of the P11D will mean that the HMRC computer (!) will include a restriction in the 2021/22 PAYE code for the 1% BIK.
Does anyone bother with P46s?
P46 ? Or P46(Car) ?
Well, it's not a disaster if you don't but there can be a certain amount of grumbling from the employee. Or, indeed, the employer if he gets the employee's grumblings rather than you.
I'm not sure whether Moneysoft would allow a zero benefit P11D to be submitted.
If not, I'd submit one on paper - just to be safe.
I'm not sure whether Moneysoft would allow a zero benefit P11D to be submitted.
If not, I'd submit one on paper - just to be safe.
Yes, it does, and you still need to enter details of the car concerned. I couldn't work out how to do this at first and had to contact Moneysoft. The g/km and cc have to be entered as nil, not ignored, otherwise it won't work.
If HMRC have sent a notice, it may be advisable to file "No Class 1A due". This will avoid unnecessary penalties and appeals.
https://www.gov.uk/government/publications/paye-no-return-of-class-1a-na...
Sage P11D software would not allow you to submit a Nil BIK P11D, I would submit a paper one
It comes to something when one has to file a positive nothing to accommodate an inferior system.
Its a benefit in kind therefore Id expect it to be declared on a P11d form even though for 20/21 the benefit might be NIL, it is still a benefit. Lets say a P46car wasnt filed filing the P11d would get it onto the employees PAYE coding for 21/22.
"Would I be required to submit a no return of Class 1A form, or should I file actual P11D forms since a benefit in kind was provided, despite there being a nil liability ?"
I think you have all the answers you need scattered across several posts, but for the avoidance of doubt ...
1. You only ever need to "submit a no return of Class 1A form" IF you have received a notice to file a P11D from HMRC. This is simply the way in which to prevent penalties being raised - and has nothing to do with the specific situation you outline.
2. Your opening statement "so the benefit in kind for 2020/21 is £0 (1% multiplier from 2021/22)" describes the situation correctly - i.e. there IS a BiK to report. So, even though it so happens (in the tax year in question) that the liability is nil, a P11D is meant to be submitted.
What is the impact of not submitting a P11D (assuming that you weren't notified to submit one)?
Probably nothing but, as has been pointed out, the result is HMRC will be unaware of the existence of the BiK ... so won't account for the liability in the new tax year (when the 1% multiplier comes into effect) AND so an unhappy employee when the liability finally becomes known to HMRC can be expected.
Any lessons?
Well the oft-ignored P46(Car), if submitted when the car was first provided, would at least have ensured that HMRC were aware of the BiK (and its relevance this tax year).
And if your software won't allow you to submit a Nil BiK P11D, I would try to submit a paper one instead.
I contacted HMRC regarding the exact same scenario and was advised that a P11D and a P11D(b) were still required so that HMRC knew that a Director "still had the vehicle"(despite a current P46(car) on file).
I submitted via the HMRC online service -and was promptly issued with a P6 to amend for the "increased Car Benefit"...... resulting in an hour of my life wasted on hold on a phone call to the Employers Helpline to arrange for the Tax Code changed back again.
1. Why waste time phoning HMRC ? You know it's not going to be an instant response.
2. Surely an increased car benefit is correct. 0% last year, 1% this year.
Yeah, well there's what you're meant to do vs what some random person within HMRC tells you to do vs what HMRC systems decide they want you to do ... and no-one ever said that any 2 of those would give you the same answer!
But as lion says, surely the car benefit does increase - so why do you think the P6 needed changing back?
Except, in the present case, a return stating no Class 1A NIC due is the correct return to make, and not P11D/P11D(b).
The mechanism for getting the correct coding is separate to the P11D position.
I'm honestly not sure what you're querying/refuting in my previous post (the one at 12:15 today). Or (drat this Sift format) are you replying to my earlier post (from 15:09 yesterday)?
However, as you said yourself in a prior response, "a return stating no Class 1A NIC due" is only required if HMRC have previously sent a notice to file. Indeed, if you send the 'nothing to submit' return when they're not expecting you to file a P11D, then confusion within their systems has been known to result.
And IMHO in OP scenario, there IS a BiK to report (even though it happens, in the tax year in question, that the liability is nil) ... so a P11D is meant to be submitted.
Where we wholeheartedly agree is that "the mechanism for getting the correct coding (should be) separate to the P11D position" ... but as HMRC do use info from the P11D to inform their allocation of a tax code via a P6, in practice these separate processes are entwined in impact.
Except, in the present case, a return stating no Class 1A NIC due is the correct return to make, and not P11D/P11D(b).
Why no P11d ?
Is there a benefit ? Yes !
Is a P11d needed ? Yes, there's a benefit to report.
Is a P11d(b) needed ? Yes, there's a P11d to submit.
And herein lies the argument. the legislation says (ITEPA), "86.—(1) Particulars of the following information must be provided in the case of each employee—
(a)any earnings which the employee receives from the employer or related third party otherwise than in money, including the amount of those earnings;"
And in context, can £0 be earnings?
If zero is not earnings (how can it be) then the reporting requirement is not met.
A free car is earnings.
Just because HMRC value it at nil under some here-today-gone-tomorrow green policy doesn't mean it's valueless.
If somebody gave me a free car, I'd say "thank you very much". I wouldn't say "this is worth nothing - it's an insult that you've given me something that has no value".
In computing terms it's the difference between 'null' (doesn't exist) and 'zero' (a numerical value that happens to be 1 less than 1).
Or presumably, although it's my least favourite area of accounting, the difference between 'exempt' and 'zero rated' in VAT.
There's a fascinating history (for a few people) within mathematics about how people coped prior to the invention of zero ... albeit only in Euro-Asiatic cultures. Some Amazonian tribes apparently still only define quantities as One or Two or Many - or, the important one, an absence of quantity.