If you are busy preparing and filing forms P11D you will know that the final reporting deadline for employers that provide Benefits in Kind (BiK) to employees, including directors, is fast approaching. In this blog post we take a look at what exactly has to be completed and by what date.
What needs to be included on P11D forms
Items that should be included when preparing and filing form P11D include any payments made, or use of company assets provided, by an employer to an employee or director that are not taxed as part of weekly or monthly remuneration.
Common examples are:
- Use of a company car
- Private fuel provided by the employer
- Private medical or life insurance premiums
As part of your obligations as an employer you must give all employees a copy of their P11D form.
How do these benefits affect employee’s tax?
The taxable benefits are added to the employee’s earnings and taxed at the appropriate income tax rates.
HMRC will usually estimate any BiKs based on previous years’ returns and reduce the employee’s tax code for the year. Any balance of tax due when actual returns are made will be collected by assessment or collected in future tax years via the PAYE process.
Can the taxable value of benefits be reduced?
If employees or directors reimburse their employer to reduce or fully repay the cost of benefits provided, then the taxable benefit will be reduced or extinguished.
For example, by paying back the cost of any private fuel provided in a tax year the Car Fuel Benefit Charge can be avoided.
For 2021-22, these repayments by employers need to be made before 6 July 2022.
Employers Class 1A National Insurance obligations
As well as creating an income tax liability for relevant employees, the sum of the taxable benefits for all employees is used to calculate a Class 1A NIC liability for employers.
These calculations need to be reported to HMRC by filing form P11D(b) on or before 6 July 2022.
Payment of any Class 1A NIC due needs to0 be made to HMRC by 22 July 2022 (or by 19 July 2022 if sending a cheque by post).
We can help with the preparation and filing of P11Ds
Please call us on 020 7330 0000 if you need help to prepare and file forms P11D or to identify benefits to be returned on the necessary returns. You can also contact us online.