Benefits in kind - your P11D explained
Posted on 31st May 2019 at 18:22
Benefits in kind are items or services that you or your employees receive from your company in addition to your salary.
They can include things like private healthcare, interest-free loans and company cars. They are reported to HM Revenue and Customs (HMRC) using the P11D form.
HMRC adds the cash equivalent of these benefits to your salary and this can affect your tax and National Insurance Contributions (NICs).
The P11D form is filed by your company or employer but if you’re a freelancer or contractor, you will need to do this yourself.When must my P11D be filed?
P11Ds aren’t linked to your company year and must be filed on paper or online by 6 July following the end of each tax year. So, your P11D for the tax year running 6 April 2018 to 5 April 2019 must be filed by 6 July 2019.
Any tax due must be paid by the 22 July each year.
What should be included in a P11D?
Anything paid by your company that has a financial value that you benefit from should be included, such as:
• a company car
• loans for season tickets on public transport
• other loans
• health insurance
• assets that you can use personally
• self-assessment fees paid by the company
• non-business travel expenses
• non-business entertainment expenses.
What doesn’t need to be included in a P11D?
Most business expenses incurred personally don’t need to be recorded on a P11D form. Examples are:
• business travel
• business entertainment expenses
• credit cards used for business purposes
• fees and subscriptions.
What happens if a P11D is filed late?
If you miss the deadline of 6 July, you will still have about a fortnight to put things right. However, if you haven’t filed it by 19 July your company will be fined £100 per month (or part month) for every 50 employees. If you haven’t filed by November, you will be sent a reminder and details of the penalties to date.
If there are errors your company could also face fines, unless HMRC is satisfied that you took reasonable care to complete your P11Ds accurately.
The Directors’ loan accounts are treated as an employment-related benefit and must be included on the relevant director’s P11D. However, as a director, you don’t need to pay interest on money you owe to the company if it is less than £10,000. Above this level the HMRC will expect interest to be paid on the total overdrawn amount, which is 2.5% for the 2018/19 tax year. The company will also need to pay Class 1A NICs on the interest payments.
Repayment for the cost of calls made using home telephones or personal mobile don’t need to be included. However, good records are needed, and a company mobile phone could be an easier solution.
If you’re not sure what should be included in a P11D, we’ll be happy to give you some advice. Just give us a call.
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