P11D - ACT NOW

It is nearly time to prepare the Forms P11D and P11D(b) for the 2009/10 tax year.  The forms are the employer’s responsibility.  They are required for directors or employees who are provided with benefits or for whom you pay or reimburse expenses. 

The Forms P11D and P11D(b) have to be submitted to HM Revenue and Customs by 6 July 2010 to avoid potential late filing penalties of up to £300 per P11D, plus £60 per day for continued failure, and £100 per month for the P11D(b).  The Class 1a National Insurance liability is due for payment by 19th July 2010 and late payment will incur interest charges.  In addition employees must be provided with a copy of their P11D by 6th July 2010.

In completing your Employers End of Year Return form P35 you should ensure that it correctly indicates whether Forms P11D are due or not.

I have attached a schedule of the typical benefits in kind provided to employees and directors for your information. Please click on the underlined words above to access it. The schedule also details the applicability of either Class 1 NIC or Class 1A NIC to the benefit / expense and whether an entry is required on form P11D or the payment of the benefit should be subject to PAYE.  Any PAYE and Class 1 NIC liability arising on a benefit / expense should be accounted for on the payroll system and returned on the End of Year forms P14 which must be submitted by 19^th May 2010.

I also draw your attention to some important information regarding certain benefits in kind and expenses, and the completion of Forms P11D:

• Details of any Expenses paid, including the use of company credit cards, or reimbursed to directors or employees should be included on forms P11D, unless a Dispensation has be issued by HM Revenue and Customs.  If a Dispensation is not in place and you have paid or reimbursed any expenses in 2009-10 these will need to be returned on forms P11D and a Dispensation application made for the future. 
• If you currently have a Dispensation in place where HM Revenue and Customs are satisfied that no tax would be payable by your employees on expenses paid or benefits provided you must ensure that you meet the qualifying conditions of the Dispensation.  Expense claims supported by receipts must be maintained and independently checked and authorised to ensure that only items covered by the Dispensation are paid.  HM Revenue and Customs will review Dispensations after a period of time, this may be by asking you to complete another Dispensation Application or it could be by carrying out an Employer Compliance Review of your records.  It is important to ensure that you are operating the Dispensation exactly as you told HM Revenue and Customs as failure to so do will invalidate the Dispensation and all expenses and benefits will have to be shown on forms P11D.  You must ensure all controls continue to be in place.  If you pay any expenses not included in a Dispensation they must be shown on a P11D.

If you require any further guidance regarding the operation of a Dispensation or would like our Tax Department to carry out a review of your benefits / expenses systems please do not hesitate to contact Kim Payne.

• HM Revenue and Customs have introduced an advisory system of benchmark scale rates which employers can use to make subsistence payments free of tax and National Insurance contributions (NICs), to employees who incur allowable business travel expenses.  The new advisory system was implemented for operation from 6 April 2009.  For full details see the following article: HM Revenue & Customs Advisory Benchmark scale rates for subsistence expenses
• With regard to company cars and fuel available for private use, the appropriate benefit scale charge percentage will be increasing in 2010-11.  The Fuel benefit charge, on which the emission percentage is applied, will be increased from £16,900 to £18,900 in 2010-11.  You may wish to review the value of these benefits for the coming year.  The Fuel Benefit charge is an all or nothing charge, so if as little as £1 worth of fuel paid for by the company is used for private use the full Fuel Benefit charge will apply.
• When a company car is provided the employer is required to send a form P46(car) to HM Revenue and Customs you must ensure that the correct manufacturers’ list price along with full details of the car are returned.  At a time when cars may be purchased at discounted rates it is important to ensure that the correct manufacturers’ list price is shown, as it is the manufacturers’ list price not the purchase price that is used to calculate the benefit charge.
• The advisory fuel rate for company cars was amended at 1 December 2009.  For the future it is to be reviewed twice a year and any changes will take effect on 1 June and 1 December.  Please note that the months notice previously given has been withdrawn.  You should ensure that the correct rate is used, as any payment by an employee to reimburse the employer for private fuel in a company car must at least equal the amount based on the published rates or the full Fuel Benefit charge will apply.
• The van fuel benefit charge is increasing from £500 to £550 in 2010-11.
• The official rate of interest applicable to beneficial loans for 2009-10 is 4.75%.

If you require any further information regarding the completion of forms P11D, or whether certain benefits in kind are still cost effective, please speak to your Lambert Chapman LLP Partner or your usual Tax Department contact.

Payroll Service available

If you already benefit from Lambert Chapman LLP providing you with a service to complete forms P11D, you may wish to consider using our internal Payroll Service for completion of your PAYE / CIS records and end of year Returns.  Please contact Jacqui Ford our Payroll manager for a quote.

 

Date:26 February 2010

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