Ainsworth & Co, Chartered Accountants and Business Advisors.

Guide to HMRC Form P11D

P11D Summary


The P11D is an HMRC form which is a declaration of taxable benefits and expenses which have been provided by employers to their directors and employees.

Typical examples of benefits are company cars and medical insurance.


P11D Details


The P11D is a UK tax form which is required, by law, to be sent / submitted to HMRC by 6th July each year, for the Income Tax year just ended - ie. the previous 5th April.

The form P11D gives HMRC particulars of any taxable expenses and benefits received by a Director or employee, either provided by the employer, or, a third party arising from the employment.

The form P11D should normally be completed by the employer for each employee as applicable.

The P11D is designed to tax employees who get payments and benefits by other means, which otherwise would not incur tax, for example where the employer pays medical insurance, petrol to drive to work, or school fees.
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This webpage carries a summary (but not definitive) details as they apply to small businesses with employees who have occasional expenses.


Which employees need a P11D completed?


The following employees should have a P11D completed:

• each Director, unless they are a full-time working director with no material interest in the company, or, a director of a charity or non-profit making concern.
• each employee earning at a rate of £8,500 a year or more (including taxable benefits)


What information goes on the P11D?



Employee expenses and benefits which must be declared on the P11D:

• Cars and car fuel - details of cars made available for private use
• Vans and van fuel.
• Interest free, and low interest, notional loans.
• Private medical treatment or insurance.
• Qualifying relocation expenses and benefits - in excess of £8,000.
• Other assets placed at the employee's disposal.
• Other items, including: Subscriptions, Educational Assistance, other Benefits.
• Mileage allowance payments - but only the excess over and above the approved amount for each, which is exempt from tax.
• Employer provided childcare, unless exempt from tax and NICs:
   > places in a nursery provided by the employer at the employer's premises
   > other qualifying childcare up to £55 per week
   > vouchers that can be exchanged for qualifying childcare up to £55 per week.


What does not go on the P11D?


If an employee pays for something on behalf of the employer, which is not a personal expense under the above categories, and then claims it back, eg. through petty cash / cheque / BACS, it does not go on the employee's P11D.

Typical examples not required to go on the P11D could be: stationery, postage, van fuel (if there is no personal use).


What if you think you shouldn't pay tax on your expenses?


Having made all the required P11D declarations, the employee can then claim that the expenses should not be taxed. If such a claim is not made - they will be taxed - and usually an employee will discover this when their tax code is changed downwards!

Under ITEPA 2003 Section 336, an employee is entitled to a deduction for any expenses which are incurred, wholly, exclusively and necessarily in the performance of the duties of the employment, (but there may be an exception for some entertaining expenses). Clothing is also a contentious issue.

It is the employee's responsibility to make the claim, although frequently an employer will prepare the S336 at the same time as completing the P11D.


P11D Nil Returns


This a link to complete a P11D Nil Return:
PAYE - no return of Class 1A National Insurance contributions due for 2014-15


P11D Dispensations


Dispensations can be applied for online at: P11DX

A dispensation can save employers and employees time and effort spent reporting travel expenses and benefits on which no tax is ultimately payable.

A dispensation means that the employer does not have to report on the P11D any expenses and benefits that are covered by the dispensation.

Before a dispensation can be issued the HMRC has to know the kind of expenses paid, how they are identified in the employer's accounting system and who is authorised to approve reimbursement. The HMRC will have to be satisfied that no tax is payable in respect of the expenses payments and benefits covered by the dispensation, and the employer operates control systems adequate to ensure that expenses payments and benefits remain within the terms of the dispensation.

Dispensations can cover any travel expenses and benefits for which there is a matching tax deduction, ie. they are a tax allowable expense. The expenses must be intended to do no more than reimburse employees for expenses actually incurred in making genuine business journeys.

The sort of items which are commonly included in dispensations are:
• Air and rail tickets provided for business travel
• Subsistence while on business travel
• Hotel bills paid directly by the employer.

The arrangements for recording and paying expenses would, therefore, normally need to show:
• The purpose of the business journey
• Details of each business journey, and
• The amount paid or reimbursed for the journey.

Dispensations cannot be given for fuel, a company car or business mileage payments for travel in employees own vehicles.


Penalties


A person who fails to make a return on form P11D within the appropriate time limit may incur a penalty not exceeding £300 with a further penalty not exceeding £60 a day if the failure continues.

There is also a penalty for making an incorrect return on form P11D. The penalty is a maximum of £3,000 per form.

There are also penalties for failing to make returns, or for making an incorrect return of Class 1A NICs on form P11D(b) Return of Class 1A National Insurance contributions.


The Sections on the P11D:


Section A – Assets Transferred
Section B – Payments made on behalf of the employee
Section C – Credit Cards and vouchers
Section D – Living Accommodation
Section E – Mileage Allowances
Section F – Cars and car fuel
Section G – Company Vans
Section H – Beneficial Loans
Section I – Medical Health
Section J – Qualifying Relocation Payments
Section K – Services Supplied
Section L – Assets placed at employee’s disposal
Section M – Other Items
Section N – Expenses Payments


More Details from HMRC


HMRC Guide
Employee travel - a tax and National Insurance contributions guide
Class 1A National Insurance contributions on benefits in kind
Form P11D 2013/14
Sole Traders file tax returns by Self Assessment.
Make sure that you are claiming all expenses you are allowed.