As an employer offering taxable benefits to your employees, you are required by HM Revenue and Customs (HMRC) to submit and report these benefits. This is done using the P11D and P11D(b) forms. If you missed the 6 July 2024 deadline you could face fines, penalties, and interest. Your reputation with HMRC as the employer will also be affected.
What Are P11D and P11D(b) Forms?
A P11D form is how you report all taxable benefits and expenses you give an employee throughout the year to HMRC. Reportable benefits include company cars for personal use, living accommodations, loans, and mileage allowances.
A P11D(b) is a form you file to report the total amount of Class 1A National Insurance contributions that are due on the taxable employer benefits.
You’re responsible for submitting a separate P11D form for each employee you offered benefits to. If you have 50 employees who qualify, you’ll submit 50 P11D forms on their behalf.
In addition, you’re expected to file one P11D(b) form per year, regardless of how many employees received benefits.
The two forms help HMRC fairly tax your employees, and they help your organisation comply with tax laws (and therefore avoid fines or penalties).
Key Components of P11D and P11D(b) Forms
On the P11D, you should have filled in details of all non-exempt benefits and expense payments you gave to your employee. Since April 2023, you’re required to fill these out online. If you have fewer than 500 employees, you can use HMRC’s PAYE Online service or alternative P11D software. If you have more than 500, you have to do it through your payroll software.
The P11D(b) form is where you declare the amounts of Class 1A National Insurance contributions you have to pay for the year. You’ll need to know the total sum in order to complete this form.
Scope of P11D Reporting
For each eligible employee, you’ll report how much you paid for their:
- Living accommodations
- Company car (including vans for private use)
- Fuel and mileage
- Loans
- Relocation expenses
HMRC’s online portal will walk you through these. You can also download working sheets to calculate your expenses.
P11D and P11D(b) Deadlines
As an employer, HMRC expects you to declare all taxable benefits on time.
The deadline for P11D submission was 6 July 2024. The submission ought to have covered your benefits expenses from 6 April 2023 to 5 April 2024. If you submitted any P11D form, you have until 22 July 2024 to pay the Class 1A National Insurance. After submission, you were also required to submit a copy of the information to each employee before 6 July 2024.
Consequences of Missing the Deadline
As an employer, if you fail to file the P11D forms, you incur a penalty of up to £300. You are further charged an additional penalty of up to £60 for every day outstanding.
Any late submission of the P11D(b) forms incurs a penalty of £100 per 50 employees for every month outstanding.
Your total Class 1A National Insurance contribution attracts interest if not paid on time. The following penalties apply:
- If still unpaid 30 days after the due date, 5% of the outstanding amount is due.
- Six months after the due date, another penalty of 5% of the unpaid amount is added.
- Twelve months after the due date, another 5% penalty is added.
The deadline is 19 July if you’re paying by cheque, and if you have a PAYE Settlement Agreement, you have until 22 October before your payment is considered “late.”
Any erroneous or incomplete filing attracts a penalty of up to £3,000 per form.
Alternative to P11D: Payrolling of Benefits
You can opt to distribute the taxing of employees’ benefits over all pay periods through payrolling of benefits. Payrolling benefits reduces your end-of-year paperwork and minimises the chances of errors during manual filing of P11D forms.
To payroll benefits, your organisation must inform and register with HMRC before the start of the tax year. However, some benefits, such as employer-provided living accommodation, cannot be payrolled.
PAYE Settlement Agreements
You can use PAYE Settlement Agreements (PSAs) to make a single annual payment that covers tax and National Insurance contributions on minor or irregular expenses on employees. To get PSAs, you must apply online with HMRC. Some of the benefits of using PSAs:
- PSAs simplify the process of paying irregular taxes on employee expenses.
- They reduce the reporting requirements.
- They maintain compliance with HMRC.
Conclusion
If you’ve given any of your employees taxable benefits in the last tax year, HMRC required you to submit P11D and P11D(b) forms by 6 July and 22 July, respectively.
At Prager Metis, we are experts in handling employee benefits. If you have inquiries about or need assistance with P11D and P11D(b) forms, contact our payroll manager, Faye Lusted (flusted@pragermetis.com).
