In this article we take a closer look at the P11D form, including what you need to include on it, when you need to file it, and – most important of all – what will happen if you don’t fulfil your P11D duties.
What is a P11D?
The P11D form is used to report benefits in kind. These are items or services which you (or your employees) receive from your company in addition to your salary, such as private healthcare, interest-free loans (to pay for train season tickets, for example) and company cars. The annual P11D form allows you to report these items to HMRC on your annual Self Assessment return.
As benefits in kind effectively increase your salary, there may be National Insurance contributions (NICs) to be paid on them, although it’s important to note these contributions will be paid by the company, not the individual.
Who needs to file a P11D?
P11Ds are filed by the employer, not the employee – although, for many freelancers and contractors, they’re one and the same.
When do I need to file a P11D?
Helpfully, P11D filings aren’t dependent on your company year, and must all be filed by 6th July following the tax year in question. So, your P11D for the tax year running 6th April 2023 to 5th April 2024 must be filed by 6th July 2024.
What needs to be included in a P11D?
Generally speaking, any items the company pays for and that the employee benefits from need to be included on the P11D form. Expenses and benefits that need to be reported to HMRC are:
- Company cars
- Loans for rail season tickets
- Other loans
- Health insurance
- Assets provided to an employee that have significant personal use
- Self Assessment fees paid by the company
- Non-business travel expenses
- Non-business entertainment expenses
P11D exemptions for certain business expenses
Prior to April 2016, expenses could be omitted from P11D forms by obtaining a special dispensation from HMRC.
This has now been replaced by an exemption system, whereby the majority of business expenses incurred personally by company employees no longer need to be recorded on a P11D form. Exempt expenses include:
- Business Travel
- Business entertainment expenses
- Credit cards used for business purposes
- Fees and subscriptions.
P11D penalties for late filing
As with most tax filings, HMRC is ready and waiting with the penalty hammer should you file late or incorrectly. If you miss the deadline of 6th July (either online or on paper), you won’t incur penalties straight away – you have about a fortnight to put things right and file.
Should July 19th come and go and your P11D is still nowhere to be seen, your company (not you personally) will incur fines of £100 per month (or part month) per 50 employees.
If you still haven’t filed by November, HMRC will send you a reminder, along with details of all the penalties you’ve accrued up until then. If your P11D is incorrect, you could also face fines – but only if HMRC believes you deserve them.
If your mistake was genuine and HMRC believes you took reasonable care before filing, you might not face any fines. However, penalties of 30%, 70% or 100% of the owed tax can be applied if HMRC believes you acted carelessly, deliberately misled them or attempted to conceal your true liabilities.
P11D Common mistakes
Directors’ loan accounts
As a director, you don’t need to pay interest on money you owe to the company - provided the director’s loan is less than £10,000.
If your directors’ loan account (DLA) is overdrawn by more than £10,000 at any point in the tax year, HMRC will expect interest to be paid on the total overdrawn amount. This should be charged at the HMRC published rate of interest (2% for the 6th April 2021 until the 5th April 2023) and will need to be paid by the relevant director.
The overdrawn amount is effectively a loan from the business to the director, is treated as an employment-related benefit, and must be included on the relevant director’s P11D form.
If you need to pay loan interest on an overdrawn DLA, then the company will also need to pay Class 1A NICs on the interest payments (the current rate is 13.8% for the 2023/24 tax year). The company will also be required to complete Form P11D(b) and submit it to HMRC.
Finally, make sure that you’re not caught out by Bed & Breakfasting. This is where you settle a director’s loan by depositing personal cash, only to withdraw the same amount within 30 days.
Home phone usage
The cost of calls made by employees from their home telephone or personal mobile where the company has repaid the expense can be overlooked. Be sure to keep a note of all your business phone usage and make sure every call is included. Getting a company mobile phone is strongly recommended to avoid any confusion.
As with all tax filings, the accuracy of your P11D form is only as good as the data used to complete it. Try to keep your records up to date, reconcile your accounts often and address any problems early. If you stay on top of your accounts, filing your P11D will be a walk in the park.
What is a P11D(b)?
On HMRC’s website, you will sometimes see Form P11D(b) referenced. A P11D(b) is a form employers must submit, summarising the individual P11D forms they’ve completed for their employees.
How to file a P11D in your Crunch account
If you’re a Crunch accounting client, filing your P11D is a piece of cake. Using the Crunch app, head to Pay Yourself, P11D Returns, Check and Submit, and agree to the declaration. After the form has been submitted, we’ll let you know if there is any National Insurance to pay and how to make a payment.
If any National Insurance contributions are due, these will need to be paid by your company. You can make the payment in your Crunch account under the Company Tax tab.
The P11D form must be filed with HMRC every year on the 6th July. Any tax due must be paid to HMRC by the 22nd July each year.