What is a P11D, and when does a director need one?

When running a Limited Company for the first time, you’ll come across lots of new accounting terminology. When it comes to payroll, one of these terms may be the ‘P11D’.

First things first, what is a P11D?

In this blog, Kerry Newman, Head of SG Accounting explains what a P11D is, and when you might need one as a director

A P11D is a form used to report Benefits in Kind (BiK) that have been provided to directors and employees by their employer.

BiK are non-cash perks or advantages given to employees in addition to their regular salary, but are still subject to tax and National Insurance contributions (NICs).

Here is a breakdown of some key points related to P11Ds:

1. P11D Form

The P11D form is used to report those BiK that have not been subject to PAYE (Pay As You Earn) tax. Employers are required to submit a P11D form for each director and employee by July 6th each year.

2. NICs Payment Deadline

Any National Insurance contributions (NICs) owed on these benefits must be paid by July 19th (or July 22nd if paid electronically).

3. Providing Copies to Employees

If you employ people, you are also responsible for providing them with copies of their P11D forms by July 6^th.

4. P11D(b)

A P11D(b) shows the amount of Class 1A National Insurance due on the reported expenses, and if sent to HMRC along with the P11D form. If there are no benefits to report, a ‘nil’ return must still be submitted to avoid penalties.

5. Penalties for Non-Compliance

If you fail to complete and submit a P11D for either a director, employee or both, you’ll be liable for penalties. This will also be the case if you’re late submitting the P11D(b), and you’ll have to pay a £100 penalty per 50 employees for each month (or part month) that it is late. HMRC may also charge further penalties and interest charges for late payments.

6. Benefits in Kind (BiK)

BiK include various non-cash perks, such as company cars, private fuel paid for by the company, private health insurance, and much more. These benefits are subject to taxation.

7. Exemptions

Some benefits, such as food provided in a staff kitchen, parking, payments into a pension, any workplace sport facilities, work-related training, workplace safety equipment, and certain business expenses which are paid for using a company credit card by an employee for work-related reasons, may not be taxable.

8. Declaration

You must declare the value of these benefits annually on a P11D form, and duplicate this information on the employment pages of individual tax returns, to ensure employees are paying the correct amount of tax on the right amounts.

9. Class 1A National Insurance

Certain BiK attract additional National Insurance contributions known as Class 1A NIC. This is an employer liability and is not counted towards an individual’s contributions for state benefits. Your accountant will be able to advise you further on this.

10. Payment

Class 1A National Insurance can be paid online through various methods, including Direct Debit, bank transfer, or debit/corporate credit card. You’re also able to pay directly through the gov.uk website.

11. Accuracy

It is the employer’s responsibility to provide accurate information to HMRC. Employers should carefully review P11D forms before submission, and seek assistance from their chosen accountant to ensure information is 100% complete.

P11D – final thoughts

P11D forms are an important part of the UK tax system, and are used to correctly report and tax BiK provided to employees and directors. In order to remain compliant with tax regulations it’s important for employers to meet deadlines, provide accurate information, and pay any associated tax and National Insurance Contributions. If you have any questions relating to P11Ds or what role they play in the running of your business, speak to your accountant.