The advantages of electronic P11D’s over paper
A good number of employers now report expenses and benefits-in-kind online because it’s quicker, easier, more secure and the employer gets confirmation that HMRC received the submission. Employers that are still filing paper forms P11D may therefore want to consider switching to online filing.
HMRC’s online systems check for, and tell you about, common errors so there’s less risk the Revenue will reject your submission. Where P11Ds are rejected this might cause an employer to miss the filing deadline.
Getting it right first time
The deadline for reporting Expenses and Benefits-in-Kind for tax year ending 5 April 2018 is 6th July 2018.
Where an employer makes a mistake or submits forms P11D late, then this could result in their employees paying the wrong amount of tax and the business paying a penalty, so it’s important to get it right.
Form P11D(b)
Form P11D(b) tells HMRC how much Class 1A NIC an employer needs to pay on all the expenses and benefits they have provided.
A business will need to submit a P11D(b) form if:
- They have submitted any P11D forms
- Paid employees’ expenses or benefits through the payroll
- HMRC has asked them to file a P11D(b) – either by sending them a P11D(b) form or an email notification to file a P11D(b).
If HMRC requests a P11D(b) but there is nothing to declare, then the employer can tell the Revenue they don’t owe Class 1A NICs by completing a declaration ‘No return of Class 1A National Insurance Contributions’.
Where paper P11D(b)s are submitted then they must be signed in ink. HMRC will not accept a copy, fax, photocopy or a stamped signature. So, if a paper form is sent to the Revenue and it hasn’t been signed in ink, the department will send it back and treat it as not having been received. If it is then returned late, a penalty will be imposed.
Payrolled benefits
Even though an employer may payroll benefits, they will still need to file a P11D(b) to advise HMRC how much Class 1A NIC they owe. They will also be required to file a P11D to declare any benefits that have not been put through the payroll.
For payrolled benefits, rather than providing the employee(s) with a copy of form P11D, the employer must instead give them a letter explaining what has been payrolled.
Amending a P11D or P11D(b)
Where a mistake has been made, then employers must send HMRC a new form.
Paying Class 1A NIC
When paying Class 1A NIC to HMRC, employers must use a special reference. This is their normal Accounts Office reference plus the numerals 1813 at the end. Failure to use the correct reference will result in HMRC not recognising payment and possibly sending payment reminders and default notices until the payment is allocated correctly.
Reducing errors – HMRC toolkit
HMRC provide an online toolkit to help reduce errors which can be found here.
P11Ds and expenses claims
From 6 April 2016, the rules changed on how to tax and report expenses, so that most business expenses that would qualify for tax relief in the hands of the employee, should not need to be reported on form P11D. Exempt or fully deductible expenses should not therefore be reported to HMRC via the P11D.
HMRC’s full guidance on how to treat each type of expense can be found here.
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