Employment Tax

Year-end benefit reporting

Produced by Tolley in association with Vince Ashall
  • 15 Oct 2021 14:13

The following Employment Tax guidance note Produced 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
  • Statutory exemption
  • PAYE Settlement Agreement (PSA)
  • Tax and NIC for year-end reporting
  • Cars and year-end reporting
  • Further assistance and guidance available from HMRC

Year-end benefit reporting

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 business expenses. See Simon’s Taxes E4.1210.

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 NIC can be collected. Class 1A NIC is an employer only charge (there is no corresponding employee NIC charge) on benefits and expenses that have not been subject to Class 1 NIC through the payroll. See Simon’s Taxes E8.1119.

Forms P11D and P11D(b)

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

HMRC has introduced an online service enabling employers to complete forms P11D and P11D(b) (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 NIC. The blue boxes indicate that no Class 1A NIC is due. However, for these benefits, a Class 1 NIC charge will normally be due through payroll at the time of provision of the benefit, with a charge to both employer and employee.

Form P11D(b) is the employer declaration. It is also used to adjust the amount of Class 1A NIC 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 be submitted to HMRC by 6 July following the end of the tax year that they cover, along with a copy of the P11D, or details of the information contained on the P11D, to employees.

What to report

The value to be reported is usually the cost to the employer in

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