Understanding the P11D
A business that employs staff will have several payroll responsibilities. One area which is often misunderstood or overlooked is the need to file a P11D. In this blog we will explore exactly what its purpose is and why it is needed.
The purpose of a P11D
If a business has set-up perks for their employees such as private medical, company car or leisure memberships, then this is considered a ‘benefit in kind’ and a P11D form should be submitted. The phrase ‘benefit in kind’ relates to any form of perk which holds a monetary value and is not a necessary essential to enable an employee to complete their job. These benefits must be declared as they are taxable and need to be considered for PAYE deductions.
Thus, the P11D acts as a declaration of benefits given to an employee during the Tax Year. HMRC will then use this information to calculate the National Insurance applicable to the individual employee. A business must ensure they incorporate the P11D submittal as part of their payroll obligations.
When does a P11D need to be submitted?
The submittal for a P11D is always based on the financial year. Once the tax year is completed a business will then have up until 6th July to complete the necessary paperwork.
If we focus on the 2022/23 tax year, then a P11D will need to be submitted no later than 6th July 2023 and for payment, if this is made electronically, then the deadline is 22nd July 2023.
Who is responsible for the P11D
It is the employer’s responsibility to ensure that a P11D is completed and submitted for every employee that is receiving ‘benefits in kind’.
There are however, 2 instances where a submission is not required. Firstly, if the employee does not receive any benefit during the financial year, for example they might have chosen to no longer have a company car, then no benefit in kind is received and no P11D submission is needed. Secondly, if a business is paying tax on the benefits through its payroll, they can then inform HMRC using a P11D(b) as a more simple way to identify National Insurance contributions.
Any P11D submission should be filed electronically either via the HMRC PAYE online service or a HMRC approved payroll software solution. Details to be declared on the submission will include full company details, relevant employee details, benefits received and relevant value of these benefits.
As a business what else do I need to know?
- If a business misses the filing deadline, then HMRC may issue fines in the region of £100 per month.
- Upon submittal of the P11D, every employee this relates to should be given a copy.
- Always keep accurate records which can be referred to after submission.
If you have any questions or need some help with a P11D submission, please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk. You can also book a free 30-minute call with Yarka – https://calendly.com/yarka-ssa/30min