Preparing for P11D 6 July deadline

With the 6 July deadline approaching for submitting P11D forms to HMRC,  Katerina Travell, Manager in Price Bailey’s Tax Team, provides a reminder of the intricacies and requirements of P11D forms which is crucial for employers to ensure preparedness, accuracy and minimise the chances of any complications.

As an employer you are responsible for recording all benefits or expenses paid to employees that can’t be processed through the payroll. This guide serves as a helpful reminder of the P11D and P11D(b) reporting requirements for expenses and benefits to employees to minimise unnecessary errors or misinformation as to what needs to be reported, and by when.

What is a P11D?

P11D forms are used by employers to inform HMRC of any Benefits in Kind (BiK) they provide to employees (including director’s) which have not been included in the payroll, the P11D form functions as a reporting mechanism for BiK received by employees and directors and the information provided enables HMRC to determine if tax is payable on those benefits. Based on current guidance, P11Ds will be required up until 2025/26, and as of March 2023 all submissions must be made online.

Typical examples of items that should be included on P11D forms, but not limited to, include company cars, gym memberships or private medical cover. Certain expenses may be exempt from reporting, provided specific requirements are met, and should be clarified with HMRC’s useful resource on expenses and benefits.

And what about P11D(b) reporting?

The P11D(b) form reports the employer’s Class 1A National Insurance Contributions due on all taxable benefits and expenses. Think of it as essentially a tax summary of all the BiKs that were provided by the employer during the tax year.

Submitting a P11D and P11D(b) forms

P11Ds can be complicated and, depending on the number of employees you have, time-consuming. You may therefore want to think about asking your accountant to prepare the P11Ds for you.

A P11D and P11D(b) can be submitted through PAYE online for employers or through HMRC -recognised commercial payroll software. If you have less than 500 employees, you can choose either method, businesses with more than 500 employees must use payroll software.

When do I need to submit P11D forms?

At the end of each tax year P11D’s must be completed. HMRC’s PAYE Online Service is used to report on forms P11D and P11D(b); declarations must be filed by 6 July following the end of the tax year on 5 April.

For example, if the benefits were provided in the 2022/23 tax year, then the P11Ds must have been submitted by the 6th of July 2023 to avoid late filing penalties.

Payment of Class 1A NIC are required by 22 July, if paying electronically.

P11D penalties from HMRC

As with most HMRC deadlines, penalties occur for misinforming or failing to inform. If you file P11D forms late, HMRC give two weeks to correct the error. Should you then miss the extension, fines of £100 per month for every 50 employees employed will occur with the maximum penalty per form being £3000.

“Errors are the easier penalty to take, if you notify HMRC promptly of the mistake. Late filings have much more severe penalties and when faced with large numbers of employees and over long periods of time fines can accumulate quickly. Many errors come down to the details, or should I say changes in the details which people fail to notice, such as the changes to BiK rate for electric cars increasing from 1% to 2% from 6th April 2022.’

Katerina Travell, Manager

If you have made an error a P11D or P11D(b) correction form can be completed. If HMRC believes that incorrect information was given deliberately or carelessly you may incur a penalty charge. It is easy to make mistakes when recording large volumes of data, in the first instance upon noticing any error, you should notify HMRC to mitigate penalties or interest charges

Top Tips for preparing for the deadline:

• Check how you pay for a benefit, the way you are paying may determine a completely different tax treatment.
• Stay on top of P11D legislation changes, quite simply changes occur frequently and it is important to either seek advice, or ensure you are aware of any updates from HMRC.
• Prepare ahead of the deadline, understandably many people scramble to complete P11Ds in the first week of July just in time for the 6 July deadline. Mistakes are more likely to happen when under time pressure and leaves little time for dealing with complications.

Given the volume of reporting required for some businesses due to employee numbers, preparing for P11D submission can be a large administrative task. Seeking assistance from an accountant is advised to minimise the workload and potential inaccuracies that can occur in reporting.