Are your P11Ds ready?

Jun5

Posted in NI

The deadline for P11Ds this year is 6 July, but could your payroll be doing more to help you complete them?

If you’re in charge of processing your company’s payroll, tax and NI, you’ll already be completely familiar with the P11D, the form on which you report benefits in kind received by your workers.

Not so long ago (pre-April 2016) payroll departments could omit certain expenses where they had been given dispensation to do so by HMRC. The dispensation (which would be offered where HMRC was satisfied that the employee would have been entitled to full tax relief on the benefit) reduced the admin burden on the HMRC – so they were happy with it – and tax reporting became that little bit easier for employers too.

But post-April 2016 dispensations stopped and were replaced by exemptions. Now, employers no longer needed a dispensation to omit expenses like business travel and subsistence, business credit cards, trivial benefits and professional fees and subscriptions from the P11D. They’re simply exempt.

P11D deadline 2019

The deadline for submitting your P11Ds this year is 6 July and it’s important to meet that deadline because penalties for delayed submission are significant – and penalties for incorrectly completed forms are higher still:

  • Late submissions: £100 per 50 employees per month
  • Incorrect forms: A percentage of the revenue lost to HMRC (up to 100%) depending on whether the error was deliberate, concealed or careless

Exempt or not?

Of course the challenge, as with all expenses and benefits, is at the grey edges of definitions. Generally, it’s pretty clear what constitutes an exempt expense, and therefore it’s a simple decision to omit it from the P11D.

But things like home to work travel, meal allowances, uniforms and entertaining costs can by muddy areas, exempt in some instances and not in others.

Given the penalties, it’s important to get it right, and seek professional tax advice to resolve any issues.

Tidying up the payroll

With the latest deadline fast approaching, we’d suggest it’s worth auditing your payroll systems to check what you’re currently paying and providing to employees. Flag up any queries and ensure that everything that should be reflected on the P11D will be.

At least that way, you’ll be able to sleep soundly come 6 July.

Need help in making interrogating your payroll simple? Talk to us.