What is P11D?

A P11D is a tax form used to report details of benefits and expenses that the employer has provided to his employees (including directors). This form is submitted on an annual basis by the employer to HMRC. This will allow HMRC to calculate the employees’ tax liabilities.

This form includes records of various types of benefits that employees received, such as loans, company cars, private healthcare, and other benefits. Employers are required to submit a detailed cash value of the benefits provided, including taxes paid on behalf of the employees.   

HMRC is using the information from this form to calculate the employees’ tax liability to ensure that the amount of tax is correct. Employees are able to use this form to complete their tax returns.

What to report?

On the P11D form, employers are enforced to declare various types of benefits and expenses provided to their employees.

Here are some examples:

• Health insurance – the cash equivalent value of the private medical insurance should be reported on this form
• Company cars – in case the employer provides its employees with company cars that they can use for their personal use as well, the cash equivalent value of the needs to be submitted in the form. The value of the car is calculated on the basis of the car price, CO2 emission, and fuel type
• Living accommodations - if the employer is providing his employees with an apartment or house, the cash equivalent amount must be reported on the form. This includes rent-free and below-market rent accommodations
• Loans – in case an employee receives a loan from the employer at an interest rate lower than the official rate, the difference between them needs to be reported on P11D
• Any other benefits – may include non-business travel expenses, vouchers, gym memberships, and others

How to report?

There are 2 options for submitting P11D. This can be done through the payroll, or the report can be submitted by the end of the tax year.

Payroll

Employers can pay their employees’ expenses and benefits through payroll. It can be done online, and paid throughout the year.

If you do it through the year you do not need to submit it at the end of the tax year. However, you still need to report Class 1A National Insurance at the end of the tax year, it can be done online.

If you decide to do it via payroll, you need to make sure that you register for it before 6 April, the start of the tax year.

End of the tax year

In this case, the employer needs to submit a separate form for each employee that received any taxable benefits and expenses.

Additionally, you as an employer need to submit a report for any Class 1A National Insurance you owe.

You can submit it online if you have less than 500 employees or your payroll software has the required features.

Once P11D is submitted employers are required to give a copy of the form to the employees by the end of 6 July following the end of the tax year.

Reminder

HMRC confirmed from 6 April 2023 paper forms are no longer accepted. P11D will be submitted online only. 

How P11D is calculated?

Due to the introduction and subsequent reversal of the Health and Social Care Levy Act 2021. The blended Class 1A NIC P11D(b) rate for 2022-23 tax year is 14.53%.

Penalties

Employers will be required to pay a penalty in case the information provided is not accurate and it results in not paying the correct amount of tax or over-claiming tax reliefs.

The penalty will be issued if the P11D was not received by the 6th of July after the end of the tax year.

In case the P11D is filled late, HMRC will charge an automatic penalty of £100 for every 50 employees for each month that the return is late after the deadline.

The maximum initial penalty is £300 per form if there was a failure to submit P11D, according to section 98(1)(i). HMRC will need to make an application to the First Tribunal who will decide if these penalties will be imposed or not.

According to Section 98(1)(ii), HMRC will continue to issue penalties of the maximum £60 per form each late day if you failed to submit P11D.

These additional penalties can be only applied after the tribunal imposed the initial penalty.

Section 98(4) states that no continuing penalty can be imposed if the failure has been remedied.

There are two types of penalties. The first type of penalty can be issued for the first 12 months’ delay and the second type is a penalty for over 12 months’ delay.

An appeal can be made in both cases, if in case you have a reasonable excuse for the delay. However, the excuse should cover the whole period of the delay.

There are no specific types of excuses that can help you to avoid the penalty as each case is different and this will vary from case to case.

The case can be when the failure of submission of P11D is beyond the contractor’s or employers’ control, made the failure unavoidable, and in case if you have the evidence that failure was remedied without unreasonable delay once all obstacles were removed. 

In case you as an employer did not submit the form by November, you will receive a reminder from HMRC, together with details of the penalty that you gained up until then.

In case you made any mistakes in the P11D HMRC may also issue you a fine but only in case when they consider that you merit them.

However, if HMRC believes that your mistakes are made purposely, to conceal your true liabilities HMRC may charge penalties of 30%, 70%, or 100% of the owed tax.

P11D deadline 2022-23

• The deadline for filing the 2022-23 P11D is 6 July 20234
• The deadline for payment of Class 1A NICs is 19 July, or 22 July, if paid electronically, unless you have ceased trading.

Please contact us for more information about P11D