Do I have to complete a P11D?

With the P11D filing deadline approaching on 6 July, and do you have to complete a P11D? And if so how?

So first of all:

What is a P11D?

This is an annual return to submit to HMRC which includes taxable benefits in kind that you have provided to your employee during the year.

The filing deadline is 6 July each year, and payment of any National Insurance is due to be paid by the employer by 19 July.

If you are a director of your own limited company, this also applies to you, as you are the employer and employee.

What is a benefit in kind?

The UK government definition of a benefit in kind is:

Goods and services provided to an employee for free or at greatly reduced costs.

Employers are legally obliged to provide their employees details of relevant benefits in kind they have received in a tax year.

What counts as a benefit?

There are many benefits you might provide to your employees, but Trivial Benefits do not need to be included.

Examples of taxable benefits are:

  • motor vehicles for private use
  • fuel for your vehicle
  • mileage paid above HMRC’s approved rates
  • private medical treatment or insurance
  • interest free and low interest loans above £10,000

What needs to be reported?

This includes benefits that your employee (or yourself as director) has received, that provide them with a benefit.

For example, if you provide a company car to your employee, this is a huge financial benefit to them, as they haven’t had to find the cash to pay for it.

Instead, your employee will pay tax each year calculated on the list price of the car.

How much does it cost?

There may be a fee from your accountant to complete a P11D on your behalf, starting from £200 plus VAT.

Your employee will pay tax on the benefit at either 20% or 40%, depending on whether they’re a basic rate or higher rate taxpayer respectively.

As an employer, you also have 13.8% employers’ class 1A national insurance (NIC) to pay on the benefit.

this is why we advise against buying a car through your own company, as it’s very costly, unless it’s an electric car.

How do you work out the tax and NIC?

Generally speaking we take the cost of the benefit, and then calculate the tax or NIC.

  • For example, if you’ve provided medical insurance costing £300 over the year, the employees’ tax is 20% or 40% of this, and the NIC is 13.8% of this, or £41.40.

If it’s a car benefit:

  1. we start with the list price of the vehicle plus any factory options and delivery, this is the P11D value.
  2. deduct any contribution made by the employee (max £5,000)
  3. we then multiply the P11D value by the benefit in kind rate (this depends on the date the car was registered, type of fuel, and CO2 emissions)
  4. deduct any days the car wasn’t available in the tax year
  5. This then gives us the taxable car benefit
  6. It’s this taxable car benefit that the employee pays tax on each year, and the employer pays 13.8% NIC.

If you also provide fuel to your employee:

This is a separate calculation, and is a fixed amount each year.

When do you have to report and pay?

  • You report for the year to 5 April each year
  • The filing deadline is 6 July
  • Payment of any Class 1A NIC is due by 19 July

What next?