P11D time again!
Are you aware you must submit a P11D form for every director or employee that received benefits and expenses within the last tax year?
June is yet another very busy month for Accountants with yet another immoveable deadline looming – P11D submissions due 6 of July 2015.
We’re actively preparing our clients’, both directors’ and employers’, P11D submission forms ready to be submitted to HMRC.
If you’re not familiar with a P11D form it’s related to company benefits and expenses that are treated as taxable remuneration often producing Class 1A NI and tax to be calculated and then collected by HMRC on 22 of July 2015 if paying online (19 July if paying by cheque).
In this blog I’ll tell you what you need to know to get started.
Who has to complete a P11D form?
Directors, directors’ families (regardless of amount earned) and employees earning at annual rate of over £8,500 and who have received company benefits or expenses within the last tax year. Form P9D should be used for employees earning less than £8,500 pa.
Which company benefits and expenses are included and exempt?
You may be unclear about which expenses and benefits you need to declare. To help you out here’s an overview of expenses and benefits that are included and exempt.
| Included: Which items should be declared on the P11D? | Exempt: Which items could be reclaimed through Self- Assessment? |
| Company car (Determined by C02 emission and based on list price) | Annual Parties |
| Private medical insurance paid by the employer | Relocation costs (under £8k & depends on location & change of employment duties) |
| Personal Mobile Phone paid from business account | Annual subscriptions for approved bodies |
| Interest Free Loans over £10k | Mobile phones paid by employee |
| Lunches/Food (not associated with travel) | Parking Spaces |
| Gym membership paid for by employer | Entertaining for business reasons |
| Company Assets sold to employee below current value e.g computers, furniture or cars | Childcare vouchers (£55 per week max with registered child care operators) |
As we know every business is different.
Your business may offer unusual ‘perks’ due to the service or product you sell and won’t fit neatly within the list detailed above. HMRC may still view them as benefits so it’s worth double checking before starting your P11D form.
How do I complete the P11D form?
You can either submit the P11D form to HMRC online, in paper format or you can nominate a professional to take care of it if you don’t have time to spare or are unsure which items are included or exempt.
How much do you pay HMRC on 19 or 22 of July?
Employer: Class 1A National Insurance is paid by the employer at rate of 13.8% on the total value declared on the P11D form of items liable (not everything reported is liable so take care). You must supply HMRC with an additional form the P11D(b) to report the final amount due.
Director/Employee: A Self-Assessment form must be personally completed to ensure that the tax deductible items entered on P11D form aren’t liable for tax. Employees outside self assessment need to write a letter to HMRC to claim the tax deductible items or risk being taxed incorrectly.
What are your obligations?
No matter whether you or your accountant submit the forms here’s a reminder of the key deadlines you must meet:
6 of July 2015: Submit end of year forms online to HMRC (if paper used post early)
Supply copies of the information to your employees
Inform HMRC total amount of Class 1A NI you owe (use P11D(b))
22 of July 2015: Pay Class 1A NI owed on expenses and benefits from the previous tax year (N.B pay by 19 of July if you’re paying by Cheque)
What happens if you miss the deadlines?
Deadlines are set in stone with HMRC and not open for negotiation.
If you miss the deadline or incorrectly complete the P11D return you face penalties. Fines start at £100 increasing up to £3,000 and if left unpaid continually increase every month.
You could seriously jeopardise your ability to provide company benefits used to incentivise your employees if you have to pay fines to HMRC.
How Murrison & Wilson help our clients?
We’ve removed the admin headache of P11D submissions for clients and deal directly with HMRC for them.
If you would like help with your P11D submissions or looking for some tax advice you can contact Bruce Wilson for tax advice on 0141 290 0262 or bruce@muwca.co.uk or connect via LinkedIn or Twitter.