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Everything you need to know about P11Ds

27th April 2023

Offering employees benefits in kind (or BIKs for those in the biz) is a great way for businesses to provide their employees and/or directors with additional perks or incentives. However, these benefits do have tax implications, starting with P11Ds. So, what exactly is a P11D form and what do you need to know?

What are P11Ds?

P11d forms are used in the UK to annually report certain expenses and benefits paid or made available to directors and employees.
P11Ds are for employers to disclose information about taxable benefits to HMRC that haven’t been included on the payroll.

The form requests details of things like:

  • Assets transferred to employees
  • Vouchers and credits cards provided to employees and directors
  • Company cars or vans/fuel
  • Any living accommodation provisions
  • Any payments for private medical or dental care/insurance
  • Expenses payments made on behalf of employees or directors, which the employer does not believe to be eligible for tax relief as a business expense

P11D tax is calculated depending on the benefit involved, and there are different rules for different types of benefits. However, they are all designed to arrive at an amount that is treated as earnings and taxed in the same order as earnings.

Are business expenses a ‘benefit in kind’?

Payments made to an employee or director to reimburse expenses don’t count as a benefit in kind. So, as an example, an employee is reimbursed for parking costs when travelling on company business. This wouldn’t count as a BIK.

However, sticking with the travel theme, if the company gives the employee an interest-free loan to buy a season parking pass, this should go down as a benefit in kind. This is a payment from the business that directly benefits the employee.

Why do you need to pay tax on benefits in kind?

Receiving benefits in kind from your employer effectively increases the value of what you receive from the business as an employee or director. Basically, these benefits have a cash value (and they benefit you personally, rather than the business) so HMRC needs to know about them.

Do P11Ds affect National Insurance contributions?

The P11D form allows employers to identify and report any expenses or benefits not payrolled, and pay the tax and NIC over to HMRC. This is done by completing the accompanying form P11D(b).

 

Who pays P11D tax?

If you have any taxable benefits listed in the payroll, you’ll have already paid tax through PAYE. Beneficial loans and any benefits listed on your P11D will have to be included on your Self-Assessment Tax Return.

If you don’t have a self-assessment to complete, HMRC will make an adjustment to your tax code, in order to collect tax through your salary.

Employers have to pay Class 1A NIC on non-payrolled benefits disclosed on P11Ds.

When do P11Ds need to be completed?

HMRC’s PAYE Online Service is used to report P11Ds and P11D(b) forms. They must be completed by July 6th after the end of the tax year (which is April 5th).

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