Date
01 Mar 2024Category
Employer SolutionsBenefits in kind and certain taxable expenses provided by a business to its employees need to be reported to HMRC each year, with tax and National Insurance Contributions (NICs) payable.
As the reporting deadline is looming, we explore the requirements below to help ensure timely compliance and subsequently penalty avoidance.
Reporting is dealt with by completing and submitting forms P11D and P11D(b):
P11D – completed per employee to report the benefits/expenses provided. HMRC use this to adjust the employee’s PAYE code (to collect tax at source via ongoing earnings). The employee will need this to complete their tax return if applicable.
P11D(b)– the employer’s declaration that all P11Ds are correct. This also confirms the total Class 1A NICs due (calculated at 13.8% on the total benefits provided).
A guide on how to complete can be found here.
Some of the more commonly reported items include:
P11D & P11D(b) forms must be filed by 6th July following the end of the tax year (i.e. 6th July 2024 for the 2023/24 tax year). Late P11D forms attract penalties of £100 for every 50 employees per month.
The resulting Class 1A NIC must be paid by 19th July, with interest charged on any late payments.
Businesses also have the option to payroll their benefits in kind, as an alternative to submitting P11Ds for each employee. This ensures that the correct benefits tax is deducted in real time and can avoid some of the confusion that can occur with PAYE coding changes. Overall, payrolling benefits in kind can significantly reduce P11D reporting requirements, reduce risk, and free up valuable administration time for the business.
With the exception of beneficial loans and accommodation, all benefits can be payrolled. An employer can register to payroll all benefits or just certain ones.
Payrolling of benefits in kind will become mandatory from 6 April 2026 and the collection of Class 1A NICs will be effected through the payroll from that point, thus negating the requirement for employers to submit a P11D(b) at the end of the tax year from 2026/27. You may want to consider preparing for this by registering with HMRC to begin payrolling your benefits in kind for the 2024/25 tax year. Please note that the registration will need to be completed before 5 April 2024 for the 2024/25 tax year.
If you are interested in voluntarily payrolling benefits from 6 April 2024, please contact us to discuss how we can help you with this. If you choose to do this, you will need to determine the benefits to be payrolled and the value of the benefit to be payrolled for each employee registered before your first payroll submission in April 2024.
We provide comprehensive support for annual P11D requirements. If you require any assistance with preparing P11D and P11D(b) forms or would like to discuss payrolling benefits in kind, please get in touch with your usual Azets advisor or a member of our specialist team.
