What is a P11D form?

Confused by P11D forms? Unsure whether you need to file one? Want to avoid the common mistakes? Read our articles and you’ll be an expert in no time.

In this article we take a closer look at the P11D form, including what you need to include on it, when you need to file it, and – most important of all – what will happen if you don’t fulfill your P11D duties.

What is a P11D?

The P11D form is used to report benefits in kind. These are items or services which you (or your employees) receive from your company in addition to your salary, such as private healthcare, interest-free loans (to pay for train season tickets, for example) and company cars. The annual P11D form allows you to report these items to HMRC on your annual Self Assessment return.

As benefits in kind effectively increase your salary, there may be National Insurance contributions to be paid on them, although it’s important to note these contributions will be paid by the company, not the individual.

Who needs to file a P11D?

P11Ds are filed by the employer, not the employee – although, for many freelancers and contractors, they’re one and the same.

When do I need to file a P11D?

Helpfully, P11D filings aren’t dependent on your company year, and must all be filed by 6th July following the tax year in question. So, for example, your P11D for the tax year running April 2017 to April 2018 must be filed by 6th July 2018.

What needs to be included in a P11D?

Generally speaking, any items the company pays for that the employee benefits from need to be included on the P11D form. Expenses and benefits that need to be recorded include:

  • Company cars
  • Loans for rail season tickets
  • Other loans
  • Health insurance
  • Assets provided to an employee that have significant personal use
  • Self Assessment fees paid by the company
  • Non-business travel expenses
  • Non-business entertainment expenses

Recent changes to P11D

Prior to April 2016, expenses could be omitted from P11D forms by obtaining a special dispensation from HMRC.

This has now been replaced by an exemption system, whereby the majority of business expenses incurred personally by company employees no longer need to be recorded on a P11D. Exempt expenses include:

  • Business Travel
  • Business entertainment expenses
  • Credit cards used for business purposes
  • Fees and subscriptions

P11D penalties for late filing

As with most tax filings, HMRC is ready and waiting with the penalty hammer should you file late or incorrectly. If you miss the deadline of 6th July (either online or on paper), you won’t incur penalties straight away – you have about a fortnight to put things right and file. Should July 19th come and go and your P11D is still nowhere to be seen, your company (not you personally) will incur fines of £100 per month (or part month) per 50 employees.

If you still haven’t filed by November, HMRC will send you a reminder, along with details of all the penalties you’ve accrued up until then. If your P11D is incorrect, you could also face fines – but only if HMRC believes you deserve them.

If your mistake was genuine and HMRC believes you took reasonable care before filing, you might not face any fines. However, penalties of 30%, 70% or 100% of the owed tax can be applied if HMRC believes you acted carelessly, deliberately misled them or attempted to conceal your true liabilities.

P11D Common mistakes

Directors’ loan accounts

If your directors’ loan account (DLA) is overdrawn at any point in the tax year by over £10,000, you need to include the information on your P11D form. You’ll need to pay interest on the overdrawn amount, and your company will pay a National Insurance charge on that interest. Keep a close eye on your DLA throughout the year as you could face a tax liability if at any point it ’s overdrawn by £10,000 or more. The tax is calculated for each day that you are overdrawn by more than £10,000.

Finally, make sure that you’re not caught out by Bed & Breakfasting. This is where you settle the overdrawn amount by depositing personal cash, only to withdraw the same amount within 30 days.

Home phone usage

The cost of calls made by employees from their home telephone or personal mobile where the company has repaid the expense can be overlooked. Be sure to keep a note of all your business phone usage and make sure every call is included. Getting a company mobile phone is strongly recommended to avoid any confusion.

Neglect/forgetfulness

As with all tax filings, the quality of your P11D is only as good as the data used to complete it. Try to keep your records up to date, reconcile your accounts often and address any problems early. If you stay on top of your accounts, filing your P11D will be a walk in the park.

What is a P11D(b)?

On HMRC’s website, you will sometimes see form P11D(b) referenced. A P11D(b) is a form employers must submit, summarising the individual P11D forms they’ve completed for their employees.

How to file a P11D in your Crunch account

If you’re a Crunch accounting client, filing your P11D is a piece of cake. Using the Crunch app, head to Pay Yourself, P11D Returns, Check and Submit, and agree to the declaration. After the form has been submitted, we’ll let you know if there is any National Insurance to pay and how to make a payment.

If any National Insurance contributions are due, these will need to be paid by your company. You can make the payment in your Crunch account under the Company Tax tab.

The P11D form must be filed with HMRC every year on the 6th July. Any tax due must be paid to HMRC by the 22nd July each year.

Accountancy Healthchecks – why it’s a good idea to get checked out

If you’re hoping to start the new tax year afresh, a full check-up like this will give you some sound knowledge of your business and what you could be achieving, leaving you confident and assured about the future.

When you’re running a business, it’s easy to get caught up in it and only see how things are through your own rose-tinted glasses. You might think you’re on the right track to growth, but there could be things you’re missing out on.

This is where an Accountancy Healthcheck comes in. An accountant will take a really good look at your business and bookkeeping, identify any efficiencies and improvements you’re not taking advantage of, and, ultimately, save you some money. Because they’re independent of you and your business, their advice will be in the interest of your business.

Why is an Accountancy Healthcheck a good idea?

Tax can be quite complicated and you might not always be aware of the ways in which you can save money by claiming for the correct things.

For example, if you work from home, you might not be entirely sure about how much you can claim for stationery or equipment, or perhaps you weren’t aware that you might even be able to claim for the use of your home as an office.

An Accountancy Healthcheck will give an accountant the chance to find out what your future plans are and how they can help you achieve them. If you’re aiming to take on employees, they can advise you on the best processes for doing so, or perhaps they’ll realise you’ve not been paying yourself effectively and suggest measures that keep you tax-efficient. They can be a vital part of growing your business because their recommendations will be money-savvy and compliant.

What happens at an Accountancy Healthcheck?

Depending on who you use, you’ll get different levels of support.

At Crunch, our service comprises of an in-depth phone call between yourself and one of our qualified accountants. It’s usually about 45 minutes long and can happen at your convenience. The great thing about online accountancy is that it’s always accessible, which makes the process flexible enough to work no matter your situation.

Once you’ve had your consultation, your accountant will prepare a report which will have a selection of recommendations for you. The suggestions in the report will be in a traffic light format, making it clear what we think you’ll need to prioritise.

What will the accountant look at during an Accountancy Healthcheck?

It can depend on who you get to perform your healthcheck, but with Crunch, your accountant will look at:

  • Key accounting ratios, such as profits margins, return on capital, liquidity, and others
  • The efficiency of how you collect your income and pay for your expenses
  • Any of your major purchases and their tax
  • Material balances in the accounts
  • The implications of taking on more directors, shareholders and raising funds to grow your business
  • Your VAT registration details and if you’re on the right scheme – are you claiming back what you’re entitled in VAT?
  • Using your director’s loan account correctly and any possible implications for your tax liabilities
  • Expenses – what you are currently claiming for and what you can be
  • How to take advantage of the more complex expenses you may not have considered such as running a company car or expense when working from home
  • Tax plans you’re not taking advantage of – for instance the Annual investment allowance and Research and Development tax breaks
  • Assess any risks, such as whether you’re at risk of an IR35 investigation
  • Auto-enrolment pensions and whether you’re compliant with government rules
  • Looking at your future plans and how this will affect your business
  • Access to our specialist financial services providers should you need them.

If you’re hoping to start the new tax year afresh, a full check-up like this will give you some sound knowledge of your business and what you could be achieving, leaving you confident and assured about the future.