What is a P11D form? - Ultimate P11D Form Guide

In this blog, we’ll cover all you need to know about P11D forms, including filing, qualifying expenses and common mistakes people make when completing P11D forms.

As an employer, certain routine employee expenses don’t need to be reported to HM Revenue and Customs (HMRC). These are referred to as ‘exemption’. Dispensations have been replaced by exemptions and employers can’t submit an application for a dispensation now. Employers don’t have to report certain business expenses and benefits like:

• business travel
• telephone bills
• business entertainment expenses such as client dinners, team outings etc.
• uniform and tools for work

To qualify for an exemption, the employer must either be:

• paying a benchmark rate or a bespoke rate, approved by HMRC, to the employee as part of their earnings
• paying back the employee the real costs

An employer should subtract and pay tax and NI on all expenses and benefits given to the employees, and inform about them to HMRC. Employers don’t need to apply for an exemption if they are paying HMRC’s standard rates or flat rate for permissible expenses. Employers only need to apply for an exemption if they want to pay bespoke rates to their employees.

The P11D forms must be filed with HMRC, each year, by 6th July following the last part of the tax year. Each employer must file a P11D form for every employee in the company along with another form – P11D (b). The P11D (b) form shows the amount of National Insurance (NI), if any, the employer has to pay on the benefits provided to the employees. NI payable on benefits is referred to as “Class 1A NI” which is reported in brown colored boxes on the P11D form.

Each employer is liable to issue a copy of the P11D form to the employee. Some benefits that appear on the P11D might incur additional tax or National Insurance for either the employer or the employee or both. Certain benefits that an employee has earned and which are not shown on the P11D form must be added to the earning. The employer must deduct pay-as-you-earn (PAYE) or NI or both, depending on the value of the benefit.

The due date for filing P11D form is 6th July. If you will miss this deadline, you will incur fines & penalties from HMRC. Therefore, P11D form should be submitted to HMRC before the deadline. If you missed the deadline and even crossed the date of 19th July, your company will incur fines of £100 per month (or part month) per 50 employees.

In case you failed to file P11D form by November, you will receive a reminder along with the penalty amount from HMRC.

Initially, the employer will receive a reminder from HMRC stating that the P11d is overdue if the payment is not received by 19 July. Post this date, the employer will receive a penalty notice when the return is 4 months overdue and the minimum accumulated penalty amount is £400. To avoid paying such a huge amount as penalty it is imperative to submit the form latest by 19 July.

You can also face fine in case of incorrect filing of P11D form. If HMRC believes that your mistake is genuine and you took proper care before filing P11D form to HMRC, you may not face any fines or penalties but if HMRC believes that you acted carelessly and the error is done by you to deliberately mislead them or to hide any information, you may be charged with a penalty of 30%, 70% or 100% on the owed tax from HMRC.

1. Home phone usage

   You can exclude the amount of calls done by you from your home, telephone or personal mobile for which the company has repaid the expenses. Make sure to include each & every call done for business usage and keep the record for the same. Company mobile phone is recommended to resolve this confusion.

2. Neglect/Forgetfulness

   Keep your records up to date, pay attention to your accounts and identify the problem as early as possible so that you do not forget anything at the time of filing P11D form. If your accounts are correct & updated, you will not find any problem and can easily file P11D form before the deadline reaches.

3. Director’s loan accounts

   If the company provides director a loan up to £10000, directors don’t have to pay any interest on it but if director’s loan amount exceeds the limit of £10000 at any time in the relevant tax year, director needs to pay interest at 2.5% on the total withdrawn amount.

   The overdrawn amount will be considered as a loan from the company and needs to be included in director’s P11D form. In case, if you are paying interest on loan’s account, you also need to pay Class1 national insurance contributions on the interest payments at 13.8% (as per 2019-20 tax year). The company also needs to file form P11D (b) (summary of employee’s P11D forms submitted by the employer) to HMRC.

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