“Benefits In Kind” & Understanding Your P11D
What is a P11D?
P11D forms must be completed annually and provide an annual report on your ‘benefits in kind’. These are essentially ‘perks’ on top of your salary, including company cars, childcare, private healthcare and travel and entertainment expenses.
What records should you keep?
We recommend that you keep a record of:
- the date and details of every expense or benefit you provide;
- any information needed to work out the amounts you put on your end-of-year forms;
- any payment your employee contributes to an expense or benefit.
We would also recommend that you keep any correspondence you have with HMRC. Please note that all records must be kept for 3 years from the end of the tax year they relate to.
Example of records to keep.
Let’s say you reimburse an employee’s travel expenses , then you will need to keep a record of when and why the employee travelled and where possible keep the receipts as evidence.
Why do I need to do this?
Essentially “benefits in kind” increase your overall salary so you will be taxed on them and the company may have to pay National Insurance contributions on them.
Can I get out of it?
Some expenses and benefits are eligible for a dispensation, meaning you won’t have to report them to HM Revenue and Customs (HMRC).
Dispensations can cover routine business expenses and benefits like:
- phone bills;
- business entertainment expenses;
- company car fuel.
Find the type of expense or benefit you’ve provided at: https://www.gov.uk/expenses-and-benefitsa-to-z.
You can check whether you can apply for a dispensation so you won’t have to report it to HMRC. https://www.gov.uk/apply-for-a-dispensation.
There’s no time limit on dispensations, but HMRC reviews them regularly to make sure that they still apply.
Checking your expenses
You can only apply for a dispensation if you have a system in place to check expense claims.
Your employees aren’t allowed to check their own expenses, so someone else within your company needs to do this to make sure that they are legitimate claims.
If this isn’t possible, you’ll need to prove that your claims are covered by the dispensation. In most cases receipts will be enough, but you may be asked for more evidence if your receipts don’t include enough information.
Who files my P11D?
P11Ds are filed by the company, not the employee.
The company must file P11Ds for all company directors or employees earning over £8,500 per year and any company director with a shareholding in excess of 5%.
Where do I get my P11D Form From?
The P11D form is available on www.gov.uk – search P11D form.
When do I submit my form?
The deadline for submitting P11Ds is July 6th following the tax year in question. So for example, your P11D for the tax year ending April 2015 must be filed on July 6th 2015.
If you miss the 6th July deadline you won’t pay penalties immediately, you have around two weeks to put things right. If you submit after this period, your company could incur fines of £100 per month per 50x employees.
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