Why I hate doing P11Ds

The Practitioner
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Over the years there have been some consistent themes since my earliest years as a trainee - no-one has ever wanted to do P11Ds or annual returns - or to be the office VAT expert!

And I still hate doing P11Ds:

1. Because clients don't value them, and hence don't value our time doing them on their behalf - i.e you can't charge an adequate fee for all the hassle they are. One of my clients uses a big payroll bureau who charge just £7 per P11D! I'm not interested in competing with that!

2. Because they are always going to be wrong - with the best will in the world, you're never going to get all the expenses right, and even if you could there's no real point as there's no tax at stake; and

3. Because in spite of all the improvements in IT no-one has come up with a decent piece of software for managing the annual P11D workload. Sure, there are programs that fill in the forms, but I haven't seen one that manages submissions and controls the whole client base in the way that SA tax return software does. The Digita/PKF software does about half the job, but it could do a lot more. Most other P11D solutions don't even do that - but then, why would they? Back to my first point - if clients don't want to pay for this work, we are not going to want to invest much on software to provide a service we can't sell profitably!

Solution - get clients to invest in some one-off training so they can do their own P11Ds, and apply for as many dispensations as possible so you don't need to make returns of expenses and reimbursements. Remember you can easily apply for a dispensation online, and now is the time to get them in so that they cover the whole of 2010/11.

Or am I missing a trick? Anyone out there making money from doing P11Ds?


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11th Mar 2010 10:38


The lack of sophisticated P11D software is in part because vendors have no incentive to develop any.  HMRC have been consulting for a couple of years now about the possibility of taxing benefits through payroll (as happens in Ireland) and consequently abolishing the P11D.

Although these are still just proposals, no vendor is going to invest a lot of money developing function-rich P11D software if the whole process might be abolished in the next few years.


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By Anonymous
18th Mar 2010 21:46

What happens in Ireland...

This is what happens in Ireland. 

Up to 2003, the rules in Ireland were broadly similar to those in the U.K.  There was a P11D regime but it was different in that the employer was obliged to complete one only if requested to do so by the Revenue.  This is still the case but I don't know when I last heard of a P11D being sent out. 

From 2004, the onus was transferred to the employer to ensure that almost all benefits are taxed through the payroll.  The main ones are company cars and health insurance and the rules are a bit complex in each case but my perception is that there is a high level of compliance.  In the early days there were quite a few short visits by Revenue people to companies to ensure that they were compliant and the word got around.  In addition, due to the relatively lax P11D situation and consequent laxity on the part of employees in declaring benefits, I believe that the Revenue generated lots of additional revenue while also reducing their own admin work.  Of course, the employers got the headaches.  No difference there then!

The way it is processed in payroll is:  an amount of "notional" pay is added to taxable pay to generate the additional tax and other deductions (as well as employer social insurance at 10.75% - not previously collected under the old regime either).  Obviously the net pay needs to exclude the notional pay so, in effect, the amount of notional pay is then deducted from net pay.  Employee and employer lose, Revenue wins. 

There are few opportunities to avoid this system.  One is that the employer may give a voucher up to €250 once per year tax-free.  In addition, any share option gains etc are not part of the system and must be declared by the individual recipients. 

Bradley Hardacre


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