What should be on your P11D?
The P11D is a statutory form required by HMRC from UK based employers detailing the cash equivalents of benefits and expenses that they have provided during the tax year to their directors, and employees earning at the rate of more than £8,500 per year.
The deadline for filing the 2016/17 P11D is 6 July 2017.
Some main points for reference
- P11D is for each employee in receipt of benefits in kind and expense payments
- P11D(b) is a cover sheet for all P11Ds submitted and summarises the Class 1A NIC position
- Benefit in kind (BIK) is “cash value” and is added to employee’s income for tax purposes and is charged to employer’s NIC (Class 1A, rather than Class 1 secondary) in many cases
Common non-taxable benefits:
- Annual Christmas parties or similar functions, costing up to £150 per head. Multiple functions are added together for the purposes of the £150 limit and any that are not wholly within this are taxable
- One mobile phone IN THE NAME OF THE COMPANY. Reimbursed private phone bills are treated differently.
- Childcare vouchers (within certain limits, depending on tax rate of employee)
- Annual health screening/medical check-up – ensure company is contracting with provider
- Subsidised canteen available to all staff
- “Trivial” benefits, e.g. turkey at Christmas (£50 limit, not cash or equivalent)
Below, we have covered the requirements of each section. However, this is not an exhaustive list and happy to discuss further should you wish to contact us.
Section A – Assets transferred to employee
Taxable amount is greater of market value at either the date of transfer or when first made available (less BIK charges for use in the intervening period) less amount paid by employee.
Section B – Payments made on behalf of employee
Generally, most payments made by the employer for the employee should go through payroll, so it is very rare for this box to be used. It can include tax paid by an employer on another benefit on behalf of an employee, which is in itself a further benefit.
Section C – Vouchers and credit cards
Again, not often used, this is where vouchers and credit tokens are exchanged for goods (not for business purposes).
This could include childcare vouchers provided over the tax free allowance (£55 per week for a basic rate taxpayer, £28 per week for a higher rate taxpayer, £25 per week for additional rate taxpayer). The provision of a travel season ticket would fall under this category, but not if it was simply a loan being repaid.
Section D – Living accommodation
No benefit if
- Necessary for the proper performance of duties, or
- Provided for the better performance of duties AND it is customary to do so
Otherwise, provision of living accommodation is a taxable benefit, calculated as
- The “annual value” of the property (1973 rating value!)
- Plus the excess of the cost/value of the property over £75k times the official rate of interest at the beginning of the tax year, currently 3%.
- Or rent paid if greater
Any rent paid by the employee is deducted from the benefit.
Additional benefits occur if bills such as council tax and electricity/gas are paid by the employer, or if furniture is provided for the employee’s use.
Section E – Mileage allowance and passenger payments
Payments up to Approved Milage Allowance Payment limits do not need to be declared. These are 45p/mile up to 10,000 miles in a tax year, and 25p thereafter. Less commonly, 24p/mile for motorcycles and 20p/mile for bicycles.
The VAT is reclaimable on fuel element, but does not affect P11D. Company cars can be paid at the fuel only rate (rates vary).
Additionally, 5p/mile can be paid for carrying extra passengers (each passenger). These can also be paid for use of a company car.
Section F – Car and fuel
BIK is a function of the list price when new (regardless of age), including optional extra, and a percentage of this figure based on the CO2 emissions. The higher the CO2, the higher the percentage of list price is the benefit. Capital contributions are deducted from the list price (max £5,000), and the employee is entitled to the relevant fraction of the disposal proceeds back.
A 3% supplement is charged for diesels, but cannot take the figure above 37%. This was to be abolished from April 2016 but this has changed and the supplement remains.
Fuel is a flat rate, £22,200 for 2016/17 (multiplied by the relevant percentage for the car) This can be relatively high, and may not be tax efficient for an Owner Managed Business. We are happy to help you compare the benefit.
Section G – Vans
Flat rate BIK of £3,170, + £598 if private fuel provided. Benefit can be avoided if only for business, commuting and insignificant occasional private use.
Section H – Interest free and low interest loans
If monies (including overdrawn Directors Loan Account) lent to employee, and interest not charged, or charged at less than HMRC official rate (currently 3%), then the lack of interest (3%-actually charged) is a BIK.
This does not apply to loans under £10k.
Section I – Private medical insurance/treatment
Most commonly BUPA or similar, or dental plans. Cost to company is BIK. There is an exemption for annual health check/screening.
Section J – Relocation expenses
There are generous exemptions for payment of relocation expenses to an employee.
Excess over £8,000 of qualifying items are reported here. Non- qualifying items should be reported in section M.
Costs include removal costs, costs of selling old property and fees in connection with buying a new one, bridging loan costs and travelling.
Section K – Services supplied
Cost of any services supplied via a contract with the employer. Note that if the contract is between employee and third party provider, then if employer pays, this is settlement of a pecuniary liability and taxable as salary through payroll.
Section L – Assets placed at employee’s disposal
Excludes cars and vans etc. BIK is either rental paid by employer to third party, or 20% of the market value of the asset when first made available (per annum).
Section M – Other items
A catch all – common items include subscriptions paid (non tax deductible), such as gym memberships, non-qualifying relocation expenses and school fees contracted for by the employer (if employee contracts, this is settlement of pecuniary liability).
Section N – Expense payments
Dispensations are not applicable from 06/04/16 (see our additional article)
As examples, please see https://www.gov.uk/expenses-and-benefits-a-to-z
Most expense reimbursed are no longer reportable unless under salary sacrifice, or there is no deduction allowed against the expense.
Personal Incidental Expenses - £5 overnight in the UK and £10 overnight overseas are exempt.
Scale rates can be used instead of actual meal costs where employee away for 5hrs or more and buys a meal:
Items consumed by the business (e.g. postage, stationery) bought by employee as agent for the employer do not need to be declared.