What Is A P11D And What's It For?

A P11D is used to report Benefits in Kind either you or your employees receive from your company in addition to a salary. These include private healthcare, loans and company cars ...

Anything that is classed as Benefits in Kind will increase your salary, and because of this, there may be significant National Insurance Contributions to be paid though you should remember the company pays these contributions and not the employee.

P11Ds are filled out by the employer not the employee, and there are a number of items that should be included on a P11D that the company will pay for and the employee benefits from.

Example expenses and benefits include:

- Loans for rail season tickets
- Company cars
- Other loans
- Assets offered to employees that have significant personal use
- Health insurance
- Self Assessment fees paid by the company
- Non-business entertainment expenses
- Non-business travel expenses

However, a number of business expenses are exempt, including:

- Business Travel
- Business entertainment expenses
- Credit cards used for business purposes
- Fees and subscriptions

As with the majority of tax filings, HMRC issues penalties when P11Ds are filed late or inaccurately. The deadline for submission is the 6th of July, and if you miss this, you have a fortnight to get it sorted before your company incurs a £100 per month, per 50 employees, fine.

"Get your P11D wrong, and you could face a 30%, 70% or even 100% fine!"

But penalties like that or only if HMRC believe you deserve it as you were trying to mislead them. For genuine mistakes and late filings with reasonable excuses, HMRC is usually very lenient.

There are many common mistakes that anyone can make with a P11D. A classic example I see often is where directors pay interest on the directors' loan account for values less than £10,000.

Also, you should be very careful about depositing money into your business via the directors' loan account then withdrawing it again within 30-days. This is called Bed & Breakfasting.

"HMRC are very clear that they disapprove of this practice!"

As with all bookkeeping and accounting, the right data is the most important factor in submitting an accurate P11D. Keeping your bookkeeping up to date, reconcile your accounts regularly and if anything doesn't tally, sort it out quickly.

Stay on top of your accounts, and filing your P11D will be a breeze.

If you feel inspired to find out more about anything I've said here, do call me on 01908 774320 or leave a comment below and I'll be in touch as soon as I can.