Tax watch: P11ds

A P11d is a form used to disclose to HMRC the expenses and benefits an employee or director have received in a tax year.

P11ds are due for filing together with any payment for class 1a NIC by no later than 6th July 2018. This may seem a long time away but they are not always straightforward so here at CHW Small Business Accountants in Bolton we advise you not to leave things to the last minute.

Here is some useful information regarding P11ds and also some recent changes which you should be aware of.

Examples of items which should be disclosed on the P11d include:

  • Private healthcare
  • Company cars and in some cases, vans
  • Non-business related expenses for travel and entertainment
  • Personal use of assets provided by employer

The form is completed once a year and is prepared for every employee receiving benefits and or expenses. Further, a P11d (b) is completed to report the Class 1a NIC due on the beneficial payments.

Changes

There have been some recent changes to rules surrounding P11ds. From 6th April 2017 an exemption was brought in to cover any “routine employee expenses” meaning you don’t have to report certain business expenses and benefits. These include:

  • Business travel
  • Telephone bills
  • Business entertainment expenses
  • Uniform and tools for work

Further optional remuneration arrangements will be taxed at the higher of either the salary forgone or the taxable benefit in kind, although this will not apply for:

  • Employer provided pension saving
  • Employer provided pension advice
  • Childcare vouchers
  • Workplace nurseries
  • Directly contracted childcare
  • Cycle to work schemes
  • Ultra-low emission vehicles (ULEV) <75g Co2/km

Lastly, a £500 exemption for employer paid pension advice was introduced.

Some things to consider

There are some rules where it is easy to slip up and make a mistake, or you may not be acting in the most tax efficient way, thereby, missing out on tax savings. Some examples are detailed below but this is by no means an exhaustive list and here at CHW we would always recommend that you consult your accountant for advice.

  • Company car – inside or outside the company? Whilst the associated running costs are tax deductible in the company, if you are a small business owner the car costs could be extracted personally, thereby, incurring a lower rate of tax.
  • Directors or employees – if a change or issue of company car is not reported to HMRC by their deadline, the individual could have tax arrears which would be collected either via self-assessment or through an amended tax code.
  • Mobile phones – If the phone contract is a personal one and the company is reimbursing, you should ensure it only covers business usage.
  • Fuel – if the company pays for fuel and is not reimbursed for private use by the employee or director, the fuel benefit will require calculating and reporting on the P11d.
  • Away from home expenses – if these are greater than HMRC’s approved rates, then the additional payments require reporting on a P11d and could be subject to tax.

The rules can be complicated and there is far more to consider than just the above. At CHW Small Business Accountants in Bolton we strongly recommend you seek the advice of an accountant when it comes to completing your P11ds. They should provide you with a checklist to ensure nothing has been missed and the cost for completing your P11ds is usually quite small. Contact us now or call 01204 534031 to find out more.


This article is for general guidance only. It provides an outline, and may not include points which are important to your situation. You should not depend on this blog without taking advice based on the full facts of your case. The information given was correct at the time of publication.

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