It is time to prepare the Forms P11D and P11D(b) for the 2015/16 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 2016 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 2016 and late payment will incur interest charges.  In addition employees must be provided with a copy of their P11D by 6th July 2016.

It is no longer necessary when completing your last Full Payment Submission (FPS) under Real Time Information (RTI) to indicate whether Forms P11D’s are due or not.

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 before the Final submission for the year is made.

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 2014-15 these will need to be returned on forms P11D.
  • 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.  These would include Expense claims being supported by receipts and independently checked and authorised before payment. If your expenses include items not covered by the Dispensation then your systems must be able to identify these so that they can be reported on the Form P11D 2014-15.
  • From 6 April 2016 Dispensation Notices previously issued by HM Revenue and Customs will be abolished and replaced with a statutory exemption for specific payments, provided that they are not paid or reimbursed through a relevant salary sacrifice arrangement.  This will include business travel and subsistence payments and professional fees and subscriptions paid or reimbursed to employees, where the payments would be an allowable deduction.
  • 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 2015-16.  The Fuel benefit charge, on which the emission percentage is applied, has been increased from £21,700 in 2014-15 to £22,100 in 2015-16, with a further increase to £22,200 in 2016-17.  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 December 2015 (https://www.gov.uk/government/publications/advisory-fuel-rates/advisory-fuel-rates-from-1-december-2015).  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 £3,150 and fuel benefit charge was £594 in 2015-16, increasing to £3,170 and £598 respectively in 2016-17.
  • Beneficial Loans with a combined outstanding value to an employee of less than £10,000 (2015-16) throughout the whole year do not need to be reported.  The official rate of interest applicable to beneficial loans for 2015-16 is 3%.
  • From 2016-17, the entire benefits-in-kind code for employees earning below £8,500 is repealed.  Such employees will be subject to all benefits-in-kind from that point on.

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.

Expenses or Benefits provided in the 2015-16 Tax Year

 

Expense or benefitDetails

Class 1

payable

Class

1A due

P11D or PAYE

Assets at employees disposal or given to employeeIncluding mixed business and private use

NO

YES

P11D

Car FuelCompany Car

NO

YES

P11D

Car FuelPrivate 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

CarsPrivate use of company car

NO

YES

P11D

Childcare

 

Employer provides or contracts

(value allowed depends on rate of tax and when the scheme was joined.)

NO

NO

P11D

Employee contracts and is reimbursed

YES

NO

PAYE

Christmas bonusesCash

YES

NO

PAYE

Goods

NO

YES

P11D

Credit Card PaymentsGoods 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 not covered by a DispensationSpecific & distinct business expenses included in the payment

NO

NO

P11D

Any profit element in the payment

YES

NO

P11D

Employee personal expenses paid by employerEmployee contracts

YES

NO

P11D

Mobile Phone

(No tax on one mobile phone provided to any employee by the employer)

Phone provided by employer

NO

NO

Phone bills paid by employer – employee contracts

YES

NO

P11D

Overdrawn directors loan account/beneficial loansNon qualifying

NO

YES

P11D

Written off

YES

NO

P11D

Personal BillsPaid by the Employer

YES

NO

P11D

Payment or reimbursed to employee

YES

NO

PAYE

Private TelephoneEmployer 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 insuranceEmployer contracts with provider

NO

YES

P11D

Employee contracts with provider

YES

NO

P11D

Round sum allowanceNot matched by specific business expense

YES

NO

PAYE

School FeesEmployer contracts with School

NO

YES

P11D

Employee contracts and is reimbursed

YES

NO

PAYE

Subscriptions – not qualifying for tax reliefEmployer contracts

NO

YES

P11D

Employee contracts

YES

NO

P11D

Vans and FuelAvailable for private use

NO

YES

P11D

Disclaimer
The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.

Lambert Chapman Chartered Accountants

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