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 ...
It's important to be timely and accurate with your P11D!
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 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 fine!"
But penalties like that are 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, if the company has given you a loan then you should be very careful about depositing money into your business to repay it and then withdrawing the cash 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.
Until next time ...
ROGER EDDOWES Business Godparent
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more, it may be a great idea to give me a call on 01908 774320 and let's see how I can help you.
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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