Year end benefit reporting

By Tolley in association with Vince Ashall

The following Employment Tax guidance note by Tolley in association with Vince Ashall provides comprehensive and up to date tax information covering:

  • Year end benefit reporting
  • Forms P11D and P11D(b)
  • What to report
  • Tax and NI
  • Other

In addition to paying employees their basic pay and other pay-related items such as overtime and bonuses, it is not uncommon for employers to provide benefits and reimburse expenses incurred by their employees in the performance of their duties. See Simon’s Taxes E4.1210 (subscription sensitive).

Unless, there is an exemption in the legislation, the value of these benefits and expenses needs to be reported to HMRC at year end so that tax and Class 1A NICs can be collected. Class 1A National Insurance (NI) is an employer only charge (there is no corresponding employee NI charge) on benefits and expenses that have not been subjected to the normal Class 1 NI through the payroll. See Simon’s Taxes E8.1119 (subscription sensitive).

Forms P11D and P11D(b)

The benefits and expenses are reported on form P11D . An employer’s declaration is also required and this is made on form P11D(b) . See Simon’s Taxes E4.11124 (subscription sensitive).

HMRC has introduced an online service  enabling employers to complete forms P11D and the employer declaration.

The boxes on the P11D against which the taxable value is entered are colour coded. The brown boxes, suffixed ‘1A’, indicate those benefits that are subject to Class 1A NI. The blue boxes indicate that no Class 1A NI is due. However, for these benefits, a Class 1 NI charge will normally be due. Class 1 NI has to be dealt with through the payroll as there is an employee contribution due.

Form P11D(b) is the employer declaration; the expenses and benefits equivalent of the year-end P35. It is also used to adjust the amount of Class 1A NI that is due. This adjustment may be necessary, eg where benefits have been payrolled, ie taxed through the payroll. HMRC is keen for employers to completed forms P11D(b) using the online service .

Both forms ― P11D and P11D(b) ― have to

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