What is a P11D Form?

The term “P11D form” is typically a catch-all term for the multiple documents required by HMRC for businesses or limited companies that grant benefits in kind or cover the expenses of their employees. HMRC uses these documents to calculate the amount of income tax the employee must pay and the amount of Class 1A national insurance contributions their employer must pay.

But what are the different types of P11D form, and how are they best filled out? In this article, RealBusiness will illustrate all you need to know about these forms, including their deadline, what counts as a taxable expense/benefit and more.

What are the different types of P11D form?

There are two primary P11D forms and two secondary P11D forms used for mistakes:

• P11D form – The main form in question required of an employer for every employee that have expenses and benefits paid (on items not exempt) to calculate income tax owed. They must be submitted on July 6th, following the end of the tax year.
• P11D (b) form – Employers are required to report how much in total Class 1A national insurance contributions they owe as a result of all employment-related benefits and expenses given to employees. It must be paid by July 22nd after the tax year.
• P11D (and/or P11D b) amendment form – This is effectively the same form as either a P11D or P11D b form, the only difference being that this one will be marked with “amendment”.

The standard P11D form, when completed, must be copied and given to an employee. This is especially true if they are self-employed, as this affects their self-assessment tax return.

What goes onto a P11D form?

The truth is, what counts as expenses and benefits can be confusing due to the rules regarding exemptions. This section will help outline what counts and what does not. Bear in mind that if you add exempt benefits or expenses by mistake, HMRC will have you pay tax for them regardless.

What counts as a taxable benefit?

A taxable benefit, also known as a benefit in kind, is a non-cash reward or perk provided to an employee by an employer. The benefits paid must have personal value for it to count, meaning it’s not going to be wholly used for business.

Common examples are:

• Company cars – Cars that are given to employees to use both on private and business time.
• Fuel – Fuel that gives access to more.
• Private healthcare – Health insurance covering dental or medical coverage.
• Interest-free loans – Beneficial loans of over £10,000 qualify.
• Living accommodation – If a residence is given rent-free or below its market value.
• Assets transferred – Assets transferred, such as laptops, etc.
• Non-business travel or entertainment – Such as via rail season tickets. This does not include work purpose travel.
• Home telephone bills – This can also be extended to telephone services.
• Professional fees or subscriptions – The body in question cannot be part of HMRC’s pre-approved list of professional bodies.
• Gym memberships – Provided as a perk.
• Childcare – Costs towards childcare outside of tax-free schemes and exemption thresholds.
• Holiday accommodation – Even if the company owns the property, it’s considered a benefit in kind.

What counts as business expenses?

You must report expenses paid on behalf of, or reimbursed to, employees so long as they are not exempt under HMRC rules. There is a lot of crossover with benefits:

• Business travel or subsistence costs – In instances where there’s an element of private use.
• Mileage allowance – Above HMRC’s approved rates.
• Home telephone bill – Unless it’s split from private use.
• Professional fees or subscriptions to non-approved bodies – Such as gym memberships, magazines, coaching, etc.
• Training courses – So long as they are not directly related to the employee’s current duties.
• Relocation expenses – So long as the expenses are above the £8,000 tax-free threshold.
• Season ticket loans – Used in part for non-business travel.
• Living accommodation – Living accommodations or holiday homes provided for personal use.
• Private healthcare – Any healthcare not covered by a salary sacrifice arrangement.
• Assets transferred – Self-explanatory.
• Beneficial loans – Like interest-free loans over £10,000.

How do you identify exempt expenses and benefits?

To support business growth efficiently and encourage public-policy goals, certain benefits are made exempt from tax relief, meaning they are not to be added to the P11D form. The only surefire way to know whether something is exempt or not is to check Gov.uk’s list of exemptions.

How do you complete a P11D form?

P11D forms can be completed online via the HMRC app or through supported payroll software. The following is a step-by-step guide:

1. Fill the form – The following details are required:
   • Employee name and national insurance number
   • The types of expenses and benefits provided
   • Relevant start and end dates
   • Cash equivalent or market value of all benefits
   • Contributions made by the employee
2. Use submission tools – Either by using the HMRC’s online services or by using the payroll software that supports P11D reporting.
3. Calculate benefit value – Each benefit has its method of valuation. Check Gov.uk guidelines for a comprehensive breakdown.
4. Maintain accurate information – Embody good data collection practices. Keep all receipts, contracts, usage logs and benefit agreements for at least three years after the end of the tax year, just in case HMRC requires cross-referencing.

What happens after a P11D form submission?

After submitting your P11D form, HMRC will:

• Employee tax code – HMRC will update the tax code to collect extra income through PAYE.
• Employer pays Class 1A national insurance contributions – Based on the total cash equivalent of reported benefits.
• Employee may owe tax through self-assessment – This only applies if they are a director, high earner or have a reason to submit a tax return (such as being self-employed outside of employment with you).
• HMRC may conduct reviews – HMRC may follow up on the submission by asking for evidence.

What are some mistakes to avoid making on a P11D form?

Here are some of the most common mistakes that you should try to avoid when making P11D forms:

• Forgetting to include salary sacrifice agreements – A salary sacrifice agreement is a pact between the employer and employee, where benefits are given in exchange for a reduced salary. For most benefits, this is straightforward, but other benefits in kind have stipulations (such as having to report the greater between a company car’s normal cash equivalent or the amount of salary sacrificed).
• Omitting non-cash benefits – Items such as assets that have been transferred, holiday venues or healthcare should always be applied.
• Reporting exempt benefits – If the benefit in question is exempt, there is no need to add it.
• Failing to submit a P11D B – If even a single employee is due a benefit in kind, then Class 1a national insurance contributions are due via a P11D B.
• Incorrect cash value – Don’t use estimates, abide purely by HMRC rules when evaluating benefits in kind. Each benefit has its method. A common error made, though, is subtracting employee contributions from the value.
• Missing the 6th of July deadline – If you miss the deadline without a good reason (such as a last-minute change because of a HMRC change), then you will almost always receive a penalty, with interest being applied for continuous lateness.
• Not giving employees a copy – Always give your employees a copy of their individual P11D.
• Incorrect or inconsistent data – Mismatches between payroll and submitted forms.

Conclusion

All employers who give out benefits or cover expenses outside of exempt categories must always submit a P11D. Ensure that you have a strong data collection policy to ensure no mistakes are made, as these can similarly lead to penalties.