Another HMRC filing deadline is around the corner...it is of course the filing of the P11D and P9D by 6 July. Still none the wiser?
Background
The basic rule is that if you provide an employee with anything other than pay it may count as an expense or benefit, and you will need to check whether you need to report it to HMRC and pay any tax or national insurance on it.
Expenses and benefits must be reported to HMRC on forms P11D or P9D at the end of the tax year. The form to use depends on the employee's earnings and on whether they're a company director.
- Employees earning £8,500 or more a year - form P11D
- Employees earning less than £8,500 - form P9D
- Company directors usually complete form P11D
Company directors would only need to complete a P9D if the following apply:
- they earn at a rate of less than £8,500 per year
- they have no material interest in the company - see below for explanation
- they are either a full-time working director or a director of a charity or non-profit organisation
Who completes the P11D or P9D?
The company, as employer, is responsible for preparing a P11D and not the director. When completing form P11D or form P9D, you must enter the total value of the expenses and benefits in various categories that you provided to your employee during the tax year.
What are expenses and benefits?
Typical expenses and benefits that need to be reported include beneficial loans, company cars, school fees, health insurance and season travel tickets.
Key dates
You must make sure that you give your employees a copy of the information from their P11D or P9D no later than 6 July. Payment of any Class 1A NICs owed on expenses or benefits you’ve provided must reach HMRC’s bank account by 22 July - or 19 July if paying by cheque.
Payment of any PAYE tax or Class 1 NICs owed on expenses or benefits you’ve provided should be paid during the year according through the usual PAYE system.
The good news is...
You can apply for a dispensation to save time and paperwork in completing the P11D and P9D forms.
A dispensation is a notice which covers both the tax and national insurance and it means that you don't have to put any of the expenses or benefits that the dispensation covers onto the P11D and P9D forms. It also means that you don't have to include them on tax returns.
HMRC will usually allow a dispensation if they're satisifed that no tax or national insurance is due on the expenses paid or benefits provided to the employee.
The bad news is...
Penalties! To avoid a late-filing penalty, you must ensure that P11D and P9D forms are filed with HMRC by 6 July. The same deadline applies regardless of whether you file the form online or send HMRC a paper version.
If you file your P11D or P9D forms late, you’ll be charged a penalty of £100 per 50 employees for each month or part month your return is outstanding after the 6 July deadline. HMRC will send you a penalty notice advising you of the amount you’re being penalised.
If your P11D or P9D forms remain outstanding, you’ll receive further penalty notices in November and again the following March and July, if necessary. These penalties will be calculated the same way as the first one, so for each month or part month you delay filing your return the penalty will be £100 per 50 employees. Ouch!!
Sarah Sallis ACMA FMAAAT
Chartered Management Accountant
The Accountancy Office Limited, Basepoint Business Centre, Vale Business Park, Evesham, Worcestershire, WR11 1GP
Telephone (01386) 764741
Email: hello@accountancyoffice.co.uk
www.accountancyoffice.co.uk
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