P11D – Employers return of Directors / Employee’s Expenses and Benefits in Kind
It is time to prepare the Forms P11D and P11D(b) for the 2019/20 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 non-deductible expenses.
The Forms P11D and P11D(b) have to be submitted to HM Revenue and Customs by 6th July 2020 to avoid potential late filing penalties of up to £300 per P11D, plus £60 per day for continued failure, and £100 per 50 employee per month for the P11D(b). The Class 1A National Insurance liability is due for payment by 22nd July 2020 if paying electronically or 19th July 2020 if not. Late payment will incur interest charges. In addition employees must be provided with a copy of their P11D by 6th July 2020.
Below is a schedule of the typical benefits in kind provided to employees and directors for your information. 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 at the time the payment is made.
I also draw your attention to some important information regarding certain benefits in kind and expenses, and the completion of Forms P11D:
- With regard to business expenses there is a statutory exemption for specific payments, provided that they are not paid or reimbursed through a relevant salary sacrifice arrangement. This includes business travel and subsistence payments and professional fees and subscriptions paid or reimbursed to employees, where the payments would be an allowable deduction, i.e. the expense has been incurred “wholly, exclusively and necessarily” in the course of doing their job. These payments will not need to be returned on Forms P11D.
– A checking system must be in place to ensure that the expenses have been incurred and support the amounts paid or reimbursed, I would suggest that Expense claim forms are completed and authorised, in order to be able to demonstrate this.
- With regard to company cars and fuel available for private use, the appropriate benefit scale charge percentages have increased for 2019-20. The Fuel benefit charge, on which the emission percentage is applied, has been increased from £23,400 in 2018-19 to £24,100 in 2019-20, with a further increase to £24,500 in 2020-21. 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 initially provided the employer is required to send a form P46(car) to HM Revenue and Customs and 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 March 2020 (https://www.gov.uk/government/publications/advisory-fuel-rates/advisory-fuel-rates-from-1-march-2016) It is reviewed four times a year and any changes will take effect on 1 March, 1 June, 1 September and 1 December. 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 benefit charge was £3,430 and fuel benefit charge was £655 in 2019-20, increasing to £3,490 and £666 respectively in 2020-21.
- Beneficial Loans with a combined outstanding value to an employee of less than £10,000 (2019-20) throughout the whole year do not need to be reported. The official rate of interest applicable to beneficial loans for 2019-20 is 2.5%.
- You do not have to pay Tax on Trivial Benefits provided to employees if all of the following apply:
– it cost you £50 or less to provide
– it isn’t cash or a cash voucher
– it isn’t a reward for their work or performance
– it isn’t in the terms of their contract
Expenses or Benefits provided in the 2019-20 Tax Year
|Expense or benefit||Details||Class 1||Class||P11D or PAYE|
|Assets at employees disposal or given to employee||Including mixed business and private use||NO||YES||P11D|
|Car Fuel||Company Car||NO||YES||P11D|
|Car Fuel||Private Car – paid by company credit card, garage account or fuel pump||NO||YES||P11D|
|Private Car – payment by any other method including excess mileage payments||YES||NO||P11D|
|Cars||Private use of company car||NO||YES||P11D|
|Childcare||Employer provides or contracts||NO||NO||P11D|
|(Value allowed depends on rate of tax and when the scheme was joined.)|
|Employee contracts and is reimbursed||YES||NO||PAYE|
|Credit Card Payments||Goods and services for the employer||NO||NO||–|
|Specific & distinct business expenses incurred by the employee||NO||NO||P11D|
|Items for personal use||YES||NO||P11D|
|Expenses payments||Non business expenses, or where expenses are not checked and supported as business expense||YES||NO||PAYE/|
|Any profit element in the payment||YES||NO||P11D|
|Employee personal expenses paid by employer||Employee contracts||YES||NO||P11D|
|Mobile Phone||Phone provided by employer||NO||NO||–|
|(No tax on one mobile phone provided to any employee by the employer)||Phone bills paid by employer – employee contracts||YES||NO||P11D|
|Overdrawn directors loan account/beneficial loans||Non qualifying||NO||YES||P11D|
|Personal Bills||Paid by the Employer||YES||NO||P11D|
|Payment or reimbursed to employee||YES||NO||PAYE|
|Private Telephone / internet||Employer contracts with provider, rental and non reimbursed private expenses||NO||YES||P11D|
|Employee contracts with provider, rental and private calls||YES||NO||P11D|
|Private medical insurance||Employer contracts with provider||NO||YES||P11D|
|Employee contracts with provider||YES||NO||P11D|
|Round sum allowance||Not matched by specific business expense||YES||NO||PAYE|
|School Fees||Employer contracts with School||NO||YES||P11D|
|Employee contracts and is reimbursed||YES||NO||PAYE|
|Subscriptions – not qualifying for tax relief||Employer contracts||NO||YES||P11D|
|Trivial Benefits||Provided meets full conditions shown above||NO||NO||NO|
|Vans and Fuel||Available for private use||NO||YES||P11D|
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 RTI forms. Please contact Pip Trowles our Payroll manager for a quote.