Employers who provide Benefit in Kind (BiK) to employees and directors must fill in the relevant forms by the fast-approaching year-end deadline. This blog post talks about what needs to be done and by when ...
The P11D must include items such as any payments made and use of company assets by employees and directors that are not taxed as part of normal weekly or monthly remuneration, including:
- The use of a company car
- Private fuel provided by the employer
- Private medical or life insurance premiums
All employees must get a copy of their P11D form.
So, how do these benefits affect an employee's tax? The taxable benefits are added to the employee's earnings and taxed at the appropriate income tax rates. HMRC usually estimates BiKs based on the previous year's return and reduces the employee's tax code for the year accordingly. The balance of tax due is collected in future tax years via PAYE or individual tax returns.
The taxable value of Benefit in Kind can be reduced if the employees or directors reimburse the company to reduce or fully repay the cost of the benefit provided. For example, by paying back the cost of any private fuel provided in a tax year the Car Fuel Benefit Charge can be avoided. For 2021-22, these repayments by employers need to be made before the 6th of July 2022!
When it comes to Employers Class 1A National Insurance obligations, as well as creating an income tax liability for relevant employees, the sum of the taxable benefits for all employees is used to calculate a Class 1A NIC liability for employers.
These calculations must be reported to HMRC by filing form P11D(b) on or before the 6th of July 2022. Payment of any Class 1A NIC due needs to be made to HMRC by the 22nd of July 2022 (or by the 19th of July 2022 if sending a cheque by post).
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.