The deadline for submitting P11Ds and P11D(b)s is fast approaching. The forms must be submitted to HMRC by or on behalf of employers no later than Tuesday, July 6th.
First up, what is a P11D?
A P11D is a tax form reporting on any expenses and benefits provided to employees or directors in that tax year. This information is used to calculate how much tax is due. A P11D form is submitted for each employee who has received a benefit.
What is considered an expense or benefit?
Expenses or benefits are goods or services received by employees in addition to their salary. They are expenses incurred by the business for the direct benefit of the employee. They are often referred to as benefits-in-kind or staff ‘perks’. These benefits do not go through payroll, but can be considered to increase their salary, and therefore employees must pay tax on them. Essentially, they must declare this extra ‘income’. There are a whole host of expenses and benefits HMRC considers to be taxable. Some common examples include:
- Health insurance
- Gym membership
- Non-business travel expenses
Visit HRMC’s website to view the full list of expenses and benefits, including what is exempt. Exemptions include reimbursements for business expenses incurred personally by the employee such as business travel, business entertainment, and the use of credit cards for business purposes.
What is a P11D(b)?
Some of the benefits provided to the employees may require a National Insurance contribution (NIC) to be paid on them. This will be paid by the employer, not the employee. A P11D(b) summarises the P11Ds, showing the total Class 1A NIC due to HMRC from the company. To complete the P11D(b) you must adjust your total expenses and benefits for those which Class 1A NIC is not due. Any Class 1A National Insurance owed on expenses or benefits must be paid to HMRC by 22nd July.
Struggling with P11Ds:
If you’re struggling to find the time to report on or keep track of the various expenses and benefits your employees receive, consider how your payroll software can help. BrightPay customers use the payroll software to record all types of reportable expenses and benefits that may be provided to their employees. This feature is provided to BrightPay customers at no extra cost. BrightPay provides an Expenses and Benefits submission (EXB) to send to HMRC after year end which includes your Class 1A NICs declaration (P11D(b)) and the P11D employee details for any expenses and benefits provided.
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Benefit Tax Accounting Method
As well as reporting and taxing expenses and benefits to HMRC at year end, BrightPay also supports Payrolling of Benefits, which calculates the PAYE on expenses and benefits in each pay period. When using this benefit tax accounting method, benefits and expenses are included in a Full Payment Submission (FPS) as per HMRC's requirement.
P11Ds are not required where benefits have been payrolled in real time, however a P11D(b) declaration must still be submitted to HMRC at the end of the tax year. This declaration can be submitted using BrightPay.
Please note, to payroll benefits for tax year 2021/22, you need to have registered to payroll using this method by 5 April 2021. You won’t be able to register after this date for the 2021/22 tax year as HMRC can’t process changes in-year.
To learn more about BrightPay’s features and how they can benefit your business, book a free demo today.