P11D Deadline Looming: Expenses and Benefits

To stay on the right side of HMRC’s expenses and benefits legislation, P11Ds need to be filed by 6th July.

Here we take a look at the P11D form; what’s included, what’s exempt and what the penalties are for filing late – to make the deadline, a lot less looming.

What is a P11D form?

The P11D is a statutory form required by HMRC to report benefits in kind. These are goods or services which you (or your employees) receive from your limited company in addition to your salary.

Benefits in kind include company cars, interest free loans and personal insurances (e.g. private healthcare).

P11Ds are filed by the employer, not the employee and if you are a contractor or freelancer running a limited company you are effectively both so you need to do this.

If you are a Pi Accountancy client, we can file a P11D on your behalf. The Pi Accountancy tax team will have emailed you asking for information about the benefits your company has provided to your employees, including yourself as a director. Explore our contractor and freelancer accounting services.

It is really important you respond to this email, even if no benefits have been given, as we need to file a nil return on your behalf. P11Ds need to be filed by the 6th July or your company will incur a late filing penalty of £100.

What’s included on a P11D?

In general, the expenses and benefits that need to be included on the P11D form include:

• Company cars
• Assets provided for personal use
• Personal insurances, such as life insurance or private healthcare
• Interest free loans
• Staff entertainment (exceeding HMRC set amounts)
• Other items (e.g. gym membership)

Exemptions

In 2016, HMRC introduced an automatic dispensation, which means that many of the usual business expenses personally incurred by company employees no longer need to be recorded on a P11D. In order to qualify these items need to have been incurred ‘wholly, exclusively and necessarily for business purposes’

Common examples of the expenses include:

• Company credit cards for business purposes
• Staff entertainment (within HMRC allowances)
• Client entertainment
• Travel and subsistence

In addition, there are tax free benefits that can be provided to you and your employees. Exemptions include:

• Company mobile phones
• Relevant life insurance and death in service cover
• Company pension contributions
• Mileage incurred in your private vehicle at HMRC approved mileage rates

Also exempt are so-called “trivial benefits” – these are one-off items less than £50 per item (total of £300 per tax year for company directors). An example would be seasonal gifts, like a hamper at Christmas (but not alcohol).

Penalties

True to form, HMRC are ready with fines for late or incorrect filing.

If you miss the P11D deadline of 6th July, you have about a fortnight to put things right.

If there is still no sign of a P11D, your company will be hit with fines of £100 per month (or part month), per 50 employees until the P11D is filed.

You may also face penalties if your P11D is incorrect, especially if HMRC think you have misled them or deliberately covered up benefits you have received. This penalty can be up to £3,000 per P11D form and therefore it is important this is given your careful consideration.

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