What’s all this about P11Ds??

It’s worth taking a look at why this form is necessary and what is required from the average contractor.

So what is a P11D?

P11Ds are necessary to report the benefits provided and expense payments made to employees by employers that are not put through the payroll.  It is the employer’s responsibility to submit this form to HMRC and staff by 6th July following the end of a tax year (6th April – 5th April) for any director and/or employee (earning over £8500pa) it has had throughout the period.

Why does HMRC need this information?

The main purpose of the form is to declare if any Class 1A NI is due on the benefits or expenses given to directors/employees.  In reality it’s usually just a paperwork exercise for most contractors running their own limited companies, as in the main they tend to only claim expenses which are wholly and exclusively for company purposes and therefore no additional NI is usually due.

NI at 12.8% can be payable by the employer if a client has a company car or receives other benefits such as gym memberships or a company loan of over £10,000.

How should I collect the information required for my form?

You can ask your accountant to complete this form for you, as they should already have all of the necessary information to do so from your quarterly accounts. 

Alternatively if you’re completing the form yourself you’ll need to total all of the expenses/benefits paid to you within the tax year 6th April to 5th April and allocate them to the relevant category on the return.  You will need to decide for each type of expense if it was paid to you wholly and exclusively for company purposes and declare the decision on the form.

Working out the cash equivalent for company cars and loans can be quite tricky so it’s worthwhile consulting your accountant if you have these in any case.

Class 1A NI at 13.8% will be due by your company on any benefit or expense received not wholly and exclusively for company purposes.  This is declared on form P11D(b) which the company should submit alongside your P11D and is due to be paid online by 22 July.

How can I make the submission?

Again just ask your accountant to submit this on your behalf; it should be part of the service they already provide.

Alternatively if you’re completing it yourself a paper version of the form is still available from HMRC or a more popular option is an online submission using HMRC website or third party software.

What happens if your company doesn’t submit the form by the deadline?

Late submissions are charged at £100 per up to 50 employees for each month or part month your return is outstanding after the 6 July deadline.

P11D dispensations

Your company can apply for a dispensation from HMRC so that it doesn’t need to complete a return each year however in our experience these are more hassle than they’re worth and only relate to the particular expenses you’ve applied for so they require regular review.  Certain HMRC offices seem more reluctant than others to grant these dispensations and seem to result in a relentless exchange of letters.

For further information on P11Ds or any other matter please contact your Forbes Young Accountant today.

Graeme Bennett

By graeme on June 8, 2011

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