Every year, you may be involved in the annual P11D completion exercise to report your employees' taxable benefits to HMRC. It is regulation 85 of the Income Tax PAYE Regulations 2003 that says the employer is to return the P11D to HMRC ‘before 7th July following the end of the tax year’. So, this means that they must be with HMRC on or before Saturday 06 July 2024 for the tax year 2023/24 (ended 05 April 2024).
Our Payroll expert in St Albans, Tina Wallace reviews the questions that local businesses are asking...
Submitting a P11D is simple enough. However, what about the questions:
- Which employees am I legally obliged to give a P11D to?
- What about employees who have left?
- What benefits are reportable?
The Obligation to Produce a P11D for Employees
Regulation 85 is the reference regarding the employer’s obligation (before 07 July which means by 06 July). Regulation 94 entitled ‘information to employees of other earnings’ says that employers have a legal obligation to complete the P11D for all employees but only those employed on 05 April are entitled to receive one.
So, you must complete one for all employees but the legal obligation to give one out only applies if the employee was still employed on the last working day of the tax year.
The Leaver Employee?
So, what does the law say about an employee where there is an obligation to produce a P11D but they have left:
- If they have left mid-way through the year, Regulation 94 says there is no obligation to give the ex-employee a P11D but they must make a written request within three years of the tax year end date (05 April). If it is requested, the employer must provide this within 30 days
- If they were employed on the last day of the tax year but left before 06 July, there is still an entitlement for the employer to send the P11D to the employee’s last known address
Of course, you can always choose to do something that is more than the legislative requirement and issue all P11Ds, regardless of whether the employee is a leaver. It’s nice to know the legislative standpoint though!
Whilst writing, it is worth directing employers to Regulation 97 ‘Retention of employer PAYE records’. This applies to all payroll records, not just P11D information, and says ‘an employer must keep and preserve records for not less than three years after the end of the tax year to which they relate’. Again, you can keep for longer than this requirement but you cannot keep for less.
So which Benefit-in-Kind items must be reported on Form P11D?
This list is fairly exhaustive but there are always unusual cases that would need to be looked at by an expert accountant.
Company Cars and Fuel:
- Car provided for personal use
- Fuel provided for personal use in a company car
Private Medical Insurance:
- Health insurance premiums paid by the employer
Loans:
- Loans provided to employees with interest rates below the official rate, see: beneficial loan arrangements - HMRC official rates
Accommodation:
- Living accommodation provided by the employer
Assets Transferred:
- Assets given to employees (e.g., company shares or property)
Vouchers and Credit Tokens:
- Vouchers for goods or services
- Credit tokens for personal use
Relocation Expenses:
- Expenses exceeding £8,000 for moving an employee for work
Mileage Allowances:
- Payments for business mileage in an employee’s own car over approved amounts, see: HMRC approved mileage and fuel rates
Non-cash Awards and Gifts:
- Non-cash gifts exceeding certain limits
Professional Fees and Subscriptions:
- Fees and subscriptions paid by the employer to professional bodies not directly related to the employee's job
Childcare:
- Childcare costs not provided through an approved scheme
Can employers provide any benefits that don't need to be reported on Form P11D?
Below are some examples of employee benefits that an employer can provide without having to report them on form P11D.
Trivial Benefits:
- Benefits with a value of £50 or less, such as small gifts or vouchers (within the annual limit)
Pension Contributions:
- Employer contributions to a registered pension scheme
Bicycles and Cycling Safety Equipment:
- Provided under the Cycle to Work scheme
Work-Related Training:
- Training courses relevant to the employee’s job
Staff Canteens:
- Subsidised or free meals provided at the workplace canteen
Mobile Phones:
- One mobile phone provided per employee for business and private use
Business Travel:
- Reimbursement of business travel expenses
Eye Tests and Glasses:
- Eye tests and glasses required for VDU use
Health Screening and Medical Check-ups:
- Annual health screenings and medical check-ups
Parking:
- On-site parking facilities provided by the employer
Childcare Vouchers:
- Childcare vouchers provided through an approved scheme (for schemes entered before October 2018)
Uniforms and Protective Clothing:
- Uniforms and protective clothing required for the job
Providing these benefits such as these can help minimise the administrative burden associated with reporting on Form P11D while still offering valuable perks to employees.
Employee benefits form a key part of staff remuneration packages and provide flexibility and additional value to both employees and employers. They can set firms apart from others where employees may value additional benefits over and above simple salary enhancement. As with all HMRC schemes, this is a complex area and we would always advise seeking advice from expert accountants.
If you have a small business in St Albans or Watford and require Payroll help and advice, specifically with P11D form submission, please get in touch with Tena Wallace at your local accountants.