What is P11D and Employee Benefits?

We’re not going to get too technical here, just the basics and some figures to show the impact.​​

In reality, companies could have many employees receiving all types of benefits, which result in multiple (and complex) calculations. We won’t get into that, but we're going to talk about the basics of employee benefits every business owner should know. ​​

A P11D is a form used by employers in the UK to report any non-cash benefits provided to employees. The most common non-cash benefits are:​

These benefits are reported through the P11D and may be subject to additional tax and National Insurance contributions. ​

Here’s a simple example showing the difference between two employees receiving the same remuneration value, but in different forms.​​

Jane’s Salary:​

I think we’re all OK with this.​​

Now let’s look at John. ​

John’s Salary:​

Fair? We think not, and more importantly, HMRC thinks not.​​

Employee benefits taxation aims to square things up.​

Employees are taxed on their salary and any benefits received, and the tax is based on their total income. The P11D ensures that these benefits are reported to HMRC, and employees will pay tax on the value of the benefit.​

Employers must report these benefits to HMRC on the P11D form. Employers must also pay Class 1A National Insurance contributions on the value of the benefits provided to employees. The P11D form must be submitted by July 6th after the end of the tax year (April 5th), and employers must pay any associated National Insurance by July 22nd.​

Reimbursements are where the employee pays a bill on behalf of the company. The most common are accommodation and fuel.​​

The employee provides a receipt to the employer and receives the reimbursement. The company records this as a tax-deductible expense.​​

Reimbursements aren’t included in a P11D as they are simply repaying the employee, not providing any benefit.​​

Certain small gifts and vouchers provided to employees can be exempt from P11D reporting. Specifically, if the cost of a gift or voucher is £50 or less per gift, it is generally exempt from P11D reporting and does not need to be declared to HMRC. Employees can receive multiple gifts throughout the year, and as long as each individual benefit does not exceed £50 they will qualify for the tax exemption.​

There are a number of benefits that can be provided to employees that have no tax implications and don’t need to be included on a P11D. These include:​

Beany are an online accounting firm in the UK. We handle everything accounting-related (such as annual compliance, bookkeeping, financial insights and strategy), and help business owners make smarter decisions for their business and lifestyle through our responsive, friendly expertise.​

We can help clients with P11D submissions, ensuring everything is accurate and in line with HMRC regulations.​

If you're looking for an accountant for your business, book a call or get in touch with us.​