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When it comes to declaring your tax to HMRC, it's always best to arm yourself with as much information as possible. But with so many different forms to stay on top of, things can get a bit overwhelming.
To help, we've put together this guide to one of the most perplexing of all tax forms - the P11D. Here you'll find everything you need to know.
The P11D is a form that is used to report ‘benefits in kind’. But what are benefits in kind? They're expenses or benefits that you've received through your company over and above your salary.
Because benefits in kind are seen to essentially be an increase in your salary, your company may owe National Insurance contributions on them. So, the P11D form gives you a way of logging and reporting all of the relevant items to HMRC annually. Theses benefits will also be taxable when you file your Self Assessment Tax Return.
If your company pays for something and you (or your employees) benefit from it, then there's a good chance that it'll need to be reported on your P11D form. Here are some examples of the kind of thing you'll need to include:
While this list isn't exhaustive (you can find that here), it does give you an idea of the kind of things you need to look out for.
You need to file your P11D by 6th July following the end of the tax year in question. So that means your P11D for the tax year ending 6th April 2021 will need to be filed by 6th July 2021.
As with anything involving HMRC and company tax, filing your P11D late - or not at all - can have serious consequences.
While you have a fortnight grace period following the 6th July deadline, failure to file after that the company will incur a fine of £100 per month per 50 employees.
That said, if HMRC believes you've acted carelessly or tried to conceal liabilities in your filing then you could face fines of up to 100% of the owed tax.
It's important to remember that P11D forms are submitted by the employer, not the employee. Of course, if you're a contractor or freelancer with your own limited company, then you might well be carrying out both of these roles at the same time.
There are certain business expenses that don't need to be reported on your P11D form. Broadly speaking, these allowable expenses are for costs incurred solely to help the company make more money.
Exempt expenses include things like travel for business, professional subscriptions and fees etc.
An individual P11D form needs to be submitted for every employee of the business. The snappily-titled P11D(b) form acts as an overarching view of the entire company, summarising all of the P11D forms that your company has filed in a given tax year.
If you're a sole trader or you're in a partnership with no employees, then you won't need to complete a P11D form. Otherwise, one must be submitted for every director and employee within the business.
As you can imagine, trawling back through every one of your previous year's expenses for all directors and employees would be a bit of a nightmare. As such, you should put processes in place to keep an accurate, in-depth record of all expenses throughout the year.
By spending a little bit of time upfront to get a system in place, you'll save days of labour in the long run. On top of that, a rushed submission is much more likely to contain mistakes - which could lead to a fine.
While filing your P11D form can feel like a laborious process, it is both essential and not as scary as it might seem at first. Just remember to keep detailed records of all employee and director expenses, and don't cut corners when it comes to filling in the form. Need support getting your P11D into shape? We're here to help. In fact, our team of experts can assist you with every aspect of your company and personal tax filings. Get in touch today to see how we can help.
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