If you or your employees receive expenses and benefits from your company, you might need to report them to HMRC and pay tax and National Insurance on them.
This needs to be done through a form called P11D, which is due by 6 July after the end of the tax year it relates to. Any class 1A National Insurance then needs to be paid by 22 July.
You need to complete a P11D for each employee who receives benefits.
What do you need to report?
Any items or services your employees receive in addition to a salary are classed as ‘benefits in kind’ and might need to be reported in your P11D. If you’re a company director, this includes your expenses and benefits, as you’re technically an employee of your company.
These can include company cars, health insurance, childcare, expenses for travel and entertainment, and more.
There are some exemptions to what needs to be reported to HMRC for routine expenses, including business travel and entertainment, phone bills and work uniforms. You can only qualify for these if you’re paying a flat rate as part of your employee’s earnings, a ‘bespoke’ rate approved by HMRC, or you’re paying the actual costs back to the employee.
Each type of benefit in kind needs to be calculated differently, so you’ll need to check the rules for what you’re providing. You can find an A-Z list of these on the Government’s website.
In addition to reporting expenses for each employee, you’ll need to submit P11D(b) to summarise the individual P11D forms and declare the total amount of National Insurance due to HMRC.
This needs to be done by the same deadline as your P11D forms (6 July).
Payrolling expenses and benefits
You don’t need to submit a P11D form for an employee if you pay tax on all their benefits through payroll, although you’ll still need to work out the National Insurance due and complete a P11D(b).
You’ll need to register with HMRC to do this before the start of the tax year you want to payroll for.
Once you’ve registered, you can add the cash equivalent of your employees’ benefits to their pay and tax them through your payroll – HMRC will then exclude the value of the benefit from their tax codes.
If you choose to payroll benefits, you’ll need to do so for the entire tax year or until you stop providing them.
We can help
Working out how to report and pay tax on each of the different benefits you provide can be time-consuming. That’s where we can help.
We offer a complete payroll service covering the process from end to end, including reporting benefits in kind, handling PAYE, National Insurance, statutory pay, and overseeing incentive schemes.
Get in touch to find out more.