Benefits In Kind
The deadline for reporting expenses and benefits in kind for tax year ending 5 April 2018 is 6 July 2018 and can be a complete maze of questionable benefits, are they a benefit, do they attract tax, shall I report them? Here is a little help:
How to complete P11Ds and P11D(b)
Employers will need to submit a P11D(b) form if they:
- have submitted any P11D forms;
- paid employees’ expenses or benefits through your payroll; and
- HMRC has asked employer to file a P11D(b) – either by sending a P11D(b) form or an email notification to file a P11D(b).
The P11D(b) tells HMRC how much Class 1A NICs needs to be paid on all expenses and benefits provided.
If HMRC has asked an employer to submit a P11D(b) and there is nothing to declare, and no Class 1A NICs are due, a declaration ‘No return of Class 1A National Insurance contributions’ must be completed.
Pay rolled benefits
Any employers pay rolling benefits will need to send a P11D(b) stating how much Class 1A NICs are owed. In addition, a P11D must be sent showing any benefits paid that were not pay rolled. Instead of giving employees a P11D, give them a letter explaining what has been pay rolled.
Need to adjust figure of Class 1A NICs due
Complete the P11D(b) to tell HMRC how much the Class 1A NICs liability will be. If the Class 1A NICs liability has been entered in box A on question 1 but this figure needs to be adjusted, do not complete box C. Use question 4 to inform HMRC about the adjustments, and put the total due in box F.
Send one P11D(b) for each PAYE reference. For batched P11Ds (for example, into different classes of employee or different areas of your business) total the benefits from each batch and show the overall total on one P11D(b).
Paper P11D(b) forms must be signed in ink.
HMRC will not accept a copy, fax, photocopy or a stamped signature, and any forms incorrectly submitted will be returned to the employer and treated as if the submission was never made. If it is returned late as a result, HMRC will issue a penalty.
Amending a P11D or P11D(b)
If a mistake is made, then a new form must be sent. Fill in all the boxes, not just the ones that need to be corrected.
For example, if the employee had £2,100 car benefit and £500 medical benefit but this was previously only reported as £300 medical benefit by mistake, the corrected form needs to show the car benefit as well. If a Class 1A NICs liability of, £38,000 instead of the correct figure of £39,000, was reported, the new P11D(b) needs to show £39,000.
Paying Class 1A NICs
A special reference must be used to make a Class 1A payment. This is the employer’s normal Accounts Office reference plus the numerals 1813 at the end. Note that it is essential to ensure there are no spaces between any of the numbers.
This is an example of the correct format, with a dummy reference number: 123PA001234561813
Alternatively, it is possible to use your normal payment method. If paying at a bank or sending a cheque, it is essential to use the correct payment slip, which is pre-printed with the reference in the format above. Otherwise the payment for Class 1A charges will not be recognised and HMRC ‘may send payment reminders and default notices until your payment is allocated correctly’.
P11Ds and section 336 claims
From 6 April 2016, the rules on how expenses are taxed and reported changed, removing the requirement to report expenses on form P11D as long as they are submitted online. However, exempt or fully deductible expenses must not be reported on the P11D. If you are still required to put non-taxable expenses onto the P11D, employees might ask you to include a section 336 Income Tax Act 2003 (ITA 2003) claim with the P11D.
HMRC stresses that employers are ‘not responsible for making a section 336 claim on behalf of your employees, but if you’re sending a paper P11D you can attach your employee’s claim with it so that they don’t end up with an incorrect tax code’.
Let Avanti Help You
This is a complex and time-consuming exercise that must be carried out correctly or else substantial fines can arise. Avanti have a specialist payroll bureau that can complete and file all your P11D requirements. Contact us HERE for more information
Disclaimer:- The information contained herein is given by way of general guidance only and no action should be taken solely on the basis of the information contained herein. The Avanti Group (UK) Ltd will be pleased to provide further guidance on the issues, and how they might affect you. No liability is accepted by the firm for any action taken without seeking appropriate professional advice