PAYROLL INSIGHT
A guide to P11D (and P11D(b)) returns
Jill SmithMCIPPdip, CIPP policymanager, touches on the basic information to help prepare and guide you before beginning the completion and submission process
A lthough now comfortably into the new tax year, our attention turns to the fast-approaching deadline of 6 July for the completion and submission of P11D returns to HM Revenue & Customs (HMRC). You either love them or hate P11D returns, and if you were fortunate enough to register prior to 5 April 2018 to payroll benefits, then breathe a sigh of relief as you do not need to complete any P11D returns (unless you did not payroll all your benefits in kind). This article will be useful if you are new to payroll or just want a refresher of what you need to do. Completing P11D returns can be daunting to most of us, as this is such a complex area. Even if you have software which will process the returns you still need an understanding of the basic principles. There is plenty of help and guidance available, and you will find plenty of guidance and forms to help, including the following: l 480 – Expenses and benefits – a tax guide (http://bit.ly/2H7HItt) l 490 – Employee travel – tax and NICs guide (http://bit.ly/2JoFHL8) – explains HMRC’s approach in applying the legislation on employee travel l Expenses and benefits A to Z guide (http://bit.ly/2V6kV53) – excellent guide of what to report, pay and technical guidance l Expenses and benefits for employers (http://bit.ly/2VKS5M3) – guidance on reporting, deadlines, record-keeping and dispensations l How to complete forms P11D and P11D(b) (http://bit.ly/2PTaDEe) l Class 1A National Insurance contributions on benefits in kind (http://
bit.ly/2VMKw7E). The P11D is a statutory return
actual costs. An exemption is unnecessary if paying HMRC’s benchmark rates for allowable expenses. Benefits in kind are declared to HMRC in the P11D return; and the tax due collected from the employee through their tax code or self-assessment. However, there is also a class 1A National Insurance contributions (NICs) charge which is payable by the employer; there is no employee NICs liability. The declaration P11D(b) return is used to notify HMRC of the total value of benefits that an employer has provided to its employees, along with showing the amount of class 1A NICs payable (employer only) calculated at 13.8%. This return must be completed and submitted after the P11D returns. The deadline for the payment of class 1A NICs must reach HMRC no later than 22 July if paid electronically or 19 July if paid by cheque. The P11D returns are filed by the employer by 6 July following the tax year in question. So, the returns for the tax year running to 5 April 2019 must be filed by 6 July 2019. A copy of the information entered in the P11D return is to be supplied to the individuals. P11D information can be sent to HMRC using commercial software or via either HMRC’s PAYE Online or its Online download, complete and submit the P11D (and P11D(b)) return to HMRC’s P11D support team. For certain benefits it is necessary to include the cash equivalent of the benefit provided. There are six working sheets End of Year Expenses and Benefits services. There is also the option to
required where employers have provided employees or directors with any work- related taxable expenses and taxable benefits in kind, received through the tax year and which have not already been included in wages. To be reported in the P11D are generally any items the company pays for that the employee benefits from such as: company cars and fuel; loans, including for rail season tickets; health insurance; assets provided to an employee that have significant personal use; non-business travel or entertainment expenses. ...P11D returns are filed by the employer by 6 July following the tax year in question There are some expenses that can be omitted from reporting by obtaining an exemption from HMRC. Where business expenses are incurred personally by employees, they would no longer need to be reported; examples include business travel, business entertainment expenses, uniform and tools for work, fees and subscriptions. To be eligible for an exemption, the employer must either be paying a flat rate to the employee as part of their earnings (which must be either a benchmark rate or a special ‘bespoke’ rate, approved by HMRC) or reimbursing the employee’s
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| Professional in Payroll, Pensions and Reward | June 2019 | Issue 51
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