P11 and Benefits in Kind – What Are They?

By August 5, 2022 Insights
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If you own a business and are considering offering benefits in kind, then you will need to complete a P11D form each year and file it. This form enables you to record the employee benefits that your business pays that are not considered a business expense or are related to the business.

The process of completing the P11D form can be complex and it can take time and that is the reason why using an accountant makes sense. Furthermore, it will also ensure that your form is filed correctly.

So, you might be wondering what P11D is and benefits in kind, so in this article, we are going to explain what they mean and how you can use a P11d to record benefits in kind and the impact that it will have on your accounts.

The P11D Form

If you offer benefits in kind then this form will need to be completed by you. Again, if you are wondering what benefits in kind are, then these are services or items that employees receive alongside their salary. There are many different benefits in kind available and these can include:

  • Company cars
  • Private healthcare
  • Entertainment expenses
  • Non-business travel
  • Fees associated with completing self-assessment and are covered by the company
  • Interest-free loans

What this means is that employers have the responsibility to complete the P11D form and not the employees. However, if you are a freelancer or a contractor, you might be required to complete a P11D form that will need to be filed with your self-assessment tax return.

When it comes to completing the form, you will need to submit the P11D form by the 6th July after the end of that tax year.

How is Tax and NI Affected by the P11D Form?

It helps to understand how benefits in kind impact your company accounts as that will enable you to understand P11D and benefit in kind. 

Benefits in kind could determine the amount of tax that you and employees pay as well as National Insurance. However, this all depends on what you include on your P11D forms.

Once you have declared your benefits in kind, HMRC will then consider this when calculating the amount of tax that is owed. This might mean that employees pay more tax on the benefits in kind they are given. Additionally, the amount of National Insurance that employers pay might also increase due to benefits in kind. This is 13.8% and will be decided based on the benefits in kind that they give their employees.

Filing Your P11D Forms

There are several different ways that you can file your P11D form. It is possible to do it online through the HMRC PAYE online service. It can also be submitted using the HMRC End of Year Expenses and Benefits Service or through payroll software.

If you do submit your P11D form late, there are penalties that could be issued. Therefore, it could make sense to use an accountant to ensure that you submit all records on time and correctly.

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