Many employers across the UK are currently getting their houses in order so that they can report employee benefits and expenses ahead of the 6 July 2018 deadline.
At the end of the tax year, employers may need to inform HMRC if any taxable benefits were handed out to members of staff over the previous 12 months. This includes company cars, health insurance, non-business travel, entertainment expenses and assets provided by an employer that have significant personal use.
Each taxable employee benefit is calculated differently, depending on the type of expense or benefit provided. Most taxable employee benefits can be deducted through payroll – providing the employer has registered with HMRC before the start of the tax year.
Otherwise, businesses may need to submit a P11D form to HMRC for any taxable expenses or benefits that have not been deducted through payroll.
Even if you put employee benefits through payroll during 2017/18, you will still need to send a P11D(b). Employers also need to send a P11D to show any benefits they paid that they didn’t payroll.
These forms enable the Revenue to calculate how much you need to pay in class 1A national insurance contributions (NICs), as well as how much PAYE is due from the employee on the benefit.
This is then normally collected from the employee by adjusting their tax code, with each benefit in kind having a different tax code.
It’s important to get this right to ensure the correct amount of tax is paid, while an exemption system is in place for certain benefits which are not liable for tax. These include costs related to travel, business entertainment, business credit cards, fees and subscriptions.
There’s also a penalty of £100 per 50 employees for each month or part month the P11D(b) is late, with interest also charged on late payments to HMRC.
The deadline for paying class 1A NICs is slightly later, on the 22 July 2018 (or the 19 July if paying by cheque) and financial penalties apply if you are late.