Benefits in Kind and P11D’s

22 June 2016

Some Businesses provide their employees with more than just financial rewards.They reward them with the personal use of cars or medical insurance for example, these are called “benefits in Kind”.

These benefits are usually taxable and some are also subject to class 1A national insurance. The tax and national insurance contributions (NIC) can be collected through either or a combination of the PAYE system and/or Self-Assessment.

Business expenses that are paid for by the employee and reimbursed later by the employer should be reported to HMRC, but if they were incurred for the employers business then no tax or national insurance charges arises.

HMRC’s guidance on the treatment of various expenses and benefits can be found here.

A form P11D needs to be completed for each employee or director who has received any benefits in kind or had any expenses reimbursed, unless from 2016-17 your employer decided to voluntarily payroll benefits in kind and submit information about your benefits through Real Time Information.

All forms P11D must reach HMRC along with a form P11D(b) which summarises the employers class 1A national insurance liability no later than the 6th July each year and all payments must reach HMRC by the 22nd July.

Failure to complete forms P11D and P11D(b) on time can result in severe penalties.

For late filing of P11D(b) penalties are £100 per 50 employees for each month or part month that is late. This is an automatic fine. Penalties for an incorrect P11D(b) is up to 100% of the NIC payable, this is also an automatic penalty and the level is determined by HMR’s view of your behaviour.

For late filing of P11D penalties are £300 per form and up to £60 per day until submitted. This is a discretionary penalty. The penalty for incorrect P11D is up to £3,000 per form, however this again is a discretionary penalty.

If HMRC has issued you with a form P11D(b) you must complete and return it even if you haven’t provided any benefits or reimbursed any expenses during the year.

For more information or to help you complete and submit your P11D's, please contact us or get in touch today by calling 0203 039 3993.

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