So, here you are ‘Business Owner’ – it’s got a nice ring to it, hasn’t it… You’ve probably ...
P11Ds…. Another successful cycle completed!
26 July 2022
well done, team!
Firstly, well done to the tax teams across Fortus for successfully hitting the 6th July deadline! As always, it was a great team effort.
Across the firm, a whopping 3,000 P11D forms were submitted to HMRC on behalf of our clients.
Following on from another busy period preparing, completing and submitting P11D forms to HMRC, we thought it might be useful to recap the basics and cover some of the troublesome points that kept popping up this year…
BACK TO BASICS
- P11Ds MUST be completed by employers for any employees who they’ve provided with benefits or expenses.
- P11Ds were introduced as a mechanism to prevent employers disguising remuneration to their employees.
- P11Ds must be submitted to HMRC by 6th July following the tax year (5th April to 6th July window to complete).
- Certain trivial benefits can be ignored that cost less than £50 per employee.
- You can avoid the administrative burden of P11Ds by payrolling expenses, however, this needs to be done properly and advice should be sought.
- PAYE Settlement Agreements can be applied for after the tax year has finished, allowing you to make one annual payment to cover all tax and National Insurance on minor, irregular or impractical benefits.
- Penalties for missing or incorrect P11Ds are based on lost revenue and can be anything up to 100%.
POINTS OF INTEREST & MISUNDERSTOOD AREAS
- If your company pays for your Tax Return to be completed, the fee’s a taxable benefit.
- If your company lends you money and charges you no interest or interest below the notional rate, there’s a taxable benefit. From the company perspective, there is also a Corporation Tax charge on the loan made to the employee if not repaid within 9 months of the company year end. This is often missed/ignored!
- A loan includes an overdrawn director’s account where dividends have been taken and there are not adequate reserves.
- You can’t simply decide that you want to payroll benefits – you require HMRC approval before the tax year starts. We see this mistake quite often.
- An electric car still needs to be reported on a P11D even when there was no Benefit in Kind and certainly does now even though it is only a very small charge.
- Communication between accounts/audit teams and the tax team is vital. Teams who are looking through records on behalf of the client will be able to pick up on any relevant payments or expenses that the client may not have identified independently.
- The P11D form may look short and simple, but the calculations behind it are often not. People regularly underestimate the time involved and the fee required, not to mention the small 3-month timeframe in which all forms need to be prepared and filed!
P11Ds are a risky and complex area covering a huge variety of expenses and payments. It’s therefore vital we have regular discussions.
The secret’s in the planning not the after-thought.
Tax queries? Reach out to our Tax team.