02. Aug 2019 |

What is a P11D Form and Who Needs to File It?

This article will shed light on the P11D form, including who needs to file a P11D, when to file it, what needs to be included, exemptions, penalties, and common mistakes.

  1. What is a P11D Form?
  2. Who Needs to File it?
  3. When Do I Need to File a P11D?
  4. What Needs to be Included?
  5. Exemptions
  6. Penalties
  7. Common Mistakes
p11d
This article will shed light on the P11D form, including who needs to file a P11D, when to file it, what needs to be included and much more! (© AdobeStock)

What is a P11D Form?

P11D is a form that UK based employers use to during the tax year. It includes costs such as company cars, salary bonus or medical cover. The form also contains necessary identification information of the employee, including the name, date of birth, national insurance number, and the like.

The form has 14 sections covering everything from mileage allowance to accommodation and credit cards and vouchers. HMRC uses the information to determine whether you need to pay tax on them or not. The rules governing what needs to be in the P11D are complex and change with time. Therefore, employers need to keep their details accurate. Otherwise, things can get terrible if they do not.

Who Needs to File a P11D Form?

Employers fill a P11D form on behalf of their employees. One form is submitted for each employee separately. The employees must also be given a copy of the form.

Corporate clients, freelancers, and contractors also use the form to present their benefits through the Government Gateway site. The forms can be submitted either in electronic or hard copy format.

When Do I Need to File a P11D?

The P11D is needed for the expenses and benefits to an employee who earns £8,500 or more per annum and for every director that makes less than this unless they are full-time directors with no real interest in the business.

The documents can be completed online, or you can fill paper copies then post to HMRC. The deadline for submitting is 6th July after the end of the tax year. Any tax due should be paid to HMRC by the end of 22nd July. There are consequences when one does not meet the deadline.

Where no benefits have been presented during the end of the tax year, and a P11D form or reminder is received, business owners can either file a nil return or file the no return of Class 1A form to show that they have no gains to make.

What Needs to be Included in a P11D Form?

All expenses which the company incurs directly need to be included in the P11D form. This means that the amount to account for on the P11D document should be equal to the total expenses. Assets provided for personal use by the company should also be in the form. The amount on the report should be the cash equivalent value of the assets in use. Filing these amounts means that any additional levy is payable personally and the company should pay possible Class 1A National Insurance.

Benefits come in various categories. Examples include:

  • Assets that the firm pays for and gives them to you at zero cost or a cost below market value, e.g., personal stuff paid for using the company’s cash and the money not refunded to the company
  • Payments are made on your behalf such as paying private bills from the company’s card
  • Voucher and credit cards
  • Accommodation
  • Mileage allowance
  • Interest-free loans commonly referred to as director loans.
  • Private health insurance
  • Professional subscriptions and fees
  • Work-related training
  • Non-business travel expenses
  • Entertainment expenses and many others.

If a worker receives any salary bonus and benefits, then these may also be taxable. Therefore, employers should confirm whether these fall into the group of payable benefits and should be included in the form.

P11D Exemptions

Before April 2016, payments could be excluded from P11D forms by acquiring a special consideration from HMRC. However, this has been replaced by an exemption system where most of the expenses that the company employees incur personally are excluded from the P11D form.

These exemptions include:

  • Travel
  • Entertainment expenses
  • Phone bills
  • Credit and debit cards used for business purposes
  • Subscriptions and fees

How to Apply for an Exemption

You do not require to apply for an exemption unless you are refunding at different amounts to the exact cost. So, ensure you keep all receipts as evidence for the exemptions.

P11D Penalties

Should you file the P11D form late or incorrectly, the HMRC is ready with the penalty hammer. If you skip the deadline, 6th July you will have two weeks to put things in order and file. After that, your business will incur fines of £100 per month for every 50 employees.

If by November you will not have filed the report, HMRC will send a reminder together with the particulars of the penalties you have accumulated. In case your P11D is incorrect, you could face huge fines only if HMRC thinks you deserve. The penalties are in the form of fines of 30%, 70% or 100% of the due tax.

P11D: Common Mistakes

The following are the most common but easily avoidable errors that can delay processing and cause problems with your tax codes:

  • Sending duplicate information on paper where it has already been submitted online to make sure ‘HMRC has received it.’ Such duplicates can cause delays in processing.
  • Using a paper copy that is of the wrong tax year. Therefore, ensure you check the top right corner of the first page before filling the forms.
  • Forgetting to tick the director’s box if you’re the director
  • Not including abbreviations or abbreviations where amounts are included in sections B, L, M or N
  • Not filling in accurate data
  • Not completing the benefits where they apply, not filling the fuel benefit at the field where it applies.

The importance of accurately filling in a P11D form is not something you should take lightly. Whether your payments and benefits are clear-cut or complex, you must be able to fill the P11D form. With the information above, you can educate yourself on the P11D form and avoid making mistakes. Keep in mind that the form must be filled by 6th July every year and the dues paid by 22nd July. Otherwise, you will suffer grave consequences.

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