We know taxes and forms can be a bit daunting, but the team at HRD are here to help! Today, we’re diving into the world of P11D forms – but we promise to keep it easy to understand.
So, What Exactly is a P11D Form?
Think of the P11D form as a report card for all the additional perks your employer gives you. It’s used by employers to tell HMRC about the extras (benefits and expenses) they’ve given their employees – stuff that’s not included in their regular salary. These benefits are called “benefits in kind” (BIK), and they can be anything from a company car to private health insurance.
What Kind of Benefits Make the List?
Here’s a quick rundown of the perks that usually end up on a P11D form:
Company Cars and Fuel: Got a company car you use for personal trips? It goes on the P11D!
Private Medical Insurance: If your employer pays for private healthcare, that’s on the list too.
Cheap Loans: Any loans over £10,000 with low or no interest count.
Living Accommodation: If your employer provides a place to live, it’s included.
Free or Discounted Goods and Services: Any freebies or discounts from your employer.
Relocation Costs: Moving for work and the company picks up the tab? That’s a benefit!
Travel and Entertainment: Personal travel and entertainment expenses covered by your employer.
How Do You Calculate Class 1A NIC?
Now, let’s look at the Class 1A National Insurance Contributions (NICs) – it’s simpler than you think!
Find the Cash Equivalent: Every benefit has a value. For example, a company car’s value is based on its price and CO2 emissions.
Apply the NIC Rate: The current rate is 13.8%. So, if the benefit is worth £5,000, you’ll owe £5,000 x 13.8% = £690.
How Do Employees Pay Tax on Benefits?
Once your employer has reported your benefits on the P11D form, HMRC will adjust your tax code to reflect the value of these benefits. Here’s how it works:
Tax Code Adjustment: HMRC will send you a new tax code notice showing your adjusted tax code. This new code takes into account the taxable benefits you receive.
Paying the Tax: The tax on your benefits is collected through your salary via the Pay As You Earn (PAYE) system. Your employer will deduct the tax from your pay each month, spreading the cost over the tax year. So, if you received a company car valued at £5,000, your tax code will be adjusted so that you pay tax on that £5,000 over the course of the year.
Self-Assessment Tax Return: If you file a self-assessment tax return, you’ll also need to include the benefits reported on your P11D. This ensures you pay the correct amount of tax. Simply enter the details from your P11D form in the relevant sections of your tax return.
Key Dates to Remember
Mark these dates on your calendar to avoid any last-minute scrambles:
Submit P11D Forms: Get them to HMRC by the 6th of July after the tax year ends (tax year runs from 6th April to 5th April).
Give Copies to Employees: Make sure each employee gets their copy by the 6th of July too.
Pay Class 1A NIC: Payment is due by the 19th of July if you’re sending a cheque, or by the 22nd of July if you’re paying electronically.
Wrapping Up
Filling out the P11D form doesn’t have to be a headache. We’re here to make it as painless as possible! If you’ve got any questions or need a helping hand, just give us a shout.
If an employee or director receives lower value, non-cash benefits, these may not need declaring on a P11D. To find out more, please read our blog; How to make the most of your trivial benefits allowance.
For further advice, please see gov.co.uk’s ‘How to complete P11D and P11D(b)‘