As well as receiving a monthly salary, employees (which includes directors) can also receive parts of their remuneration in non-monetary form. This could be for example:
- • the use of a company car
- • cover given to provide for private medical insurance
- • employee personal bills paid for by the company
- • the company providing living accommodation
- • the company giving an employee an asset to use privately
- • loans given to an employee
These are known as benefits in kind.
Some items are easily identifiable as a benefit in kind, while other items can seem like legitimate business expenses, but could actually be a benefit in kind.
The P11D is a statutory form required by HMRC that details the monetary value of these benefits in kind that have been provided by the employer to the employees and directors during the tax year. Benefits in kind are taxable items.
P11D forms only need to be prepared if an employee or director has benefits in kind to declare. If there is nothing to declare then a form is not required. A related form, called a P11D(b) could however be issued to the employer by HMRC. If this form is issued, then it must be signed and submitted to HMRC even if there is nothing else to declare.
In order to prepare the P11D forms for you, we need to consider the monetary values of anything that has been given to employees or paid to employees by you as the employer, outside of their normal salary in the tax year.
Reimbursed expenses – It used to be that expenses that were reimbursed to staff members which were incurred in relation to their work had to be reported on the P11D form. This included things like costs of business travel, business entertainment expenses, use of a credit card for business purposes, and many professional fees and subscriptions.
Due to the changes that came into effect in April 2016 there is no longer a requirement to declare reimbursed expenses on your employee’s form P11D as these will be covered by an automatic expense’s exemption. The rules do however state that Employers must ensure they operate a system for validating employee expense claims, including those reimbursed by way of allowances.
The enclosed P11D checklist will take you through all of the main forms of benefits in kind that most employees could have. Can you please complete one checklist for each applicable employee or director so that we can see what items may have to go on the P11D forms for them.
If you have any specific questions on anything then just let us know and we will be happy assist you.