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It’s almost that time again… are you ready for P11Ds, PSA and benefit in kind reporting?
Susan Ball, tax partner, and Lee Knight, director, the People Advisory Services at RSM UK talk through some of the reporting requirements, with associated deadlines, which will soon be upon us
I f you’re an employer and provide expenses or benefits to employees or directors, you must usually report them to HM Revenue and Customs (HMRC) so that tax and National Insurance contributions (NICs) are accounted for, unless they’re subject to an exemption. It’s important you understand what’s been provided to employees, which exemptions apply and what needs reporting as early as possible, to take the right actions and have appropriate agreements in place. You must also determine the method through which expenses and benefits should be reported –- don’t forget a reimbursement might need to have been reported on the payroll, on or before it was made, to avoid possible penalties and interest. We’d recommend employers review the expenses and benefits they provide each year (or on the introduction of something new), to establish the correct treatment and identify any changes. In this article, we recap on the methods of reporting and discuss changes applicable to tax years 2022/23 and 2023/24 that employers need to be aware of. So, what are forms P11D and P11D(b)? P11Ds are forms employers must submit to HMRC annually to confirm the value of reportable benefits they’ve provided to employees and directors. This is where the benefits aren’t covered by a formal payrolling arrangement with HMRC or aren’t dealt with under a pay as you earn (PAYE) settlement agreement (PSA). The P11D(b) form is the employer’s annual return of class 1A NICs due on those benefits. The deadline for submitting forms P11D and P11D(b) is 6 July following the tax year the benefits were provided in. A copy of each employee’s form P11D, or the information it contains, must be provided to employees by the same date.
Any class 1A NIC payments (the employer’s NICs due on taxable benefits) are due by 19 or 22 July following the tax year, depending on how payment is made. For the 2022/23 tax year, class 1A NICs will be charged at a blended rate of 14.53% due to the changes to NI rates part way through the tax year. Are we able to submit paper forms P11D? From the 2022/23 reporting year, HMRC will no longer accept paper forms P11D and P11D(b). From 6 April 2023, HMRC will also no longer accept any paper amendments. Instead, a new online submission link to submit amended forms P11D and P11D(b) is being launched. What about payrolling benefits? Currently, employers can choose to payroll certain benefits rather than report them on forms P11D. The only benefits which cannot currently be payrolled are: l living accommodation l beneficial loans. To payroll benefits, employers must formally register via HMRC’s portal before the start of the tax year they first want to payroll the benefit(s) from. If, therefore, an employer would like to payroll benefits for the 2024/25 tax year, it must formally register with HMRC before 6 April 2024. We wouldn’t suggest registering too close to the deadline because it may first be necessary to register for HMRC’s PAYE online service. Once registered, the employer must then add the correct cash equivalent value of the payrolled benefit(s) to employees’ taxable pay under PAYE, and HMRC should then exclude the value of the benefit from the employees’ tax codes. The main advantages of payrolling benefits are that it: l reduces the employer’s end of year P11D administration
| Professional in Payroll, Pensions and Reward | May 2023 | Issue 90 54
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