Top 5 tips for making sure you get your P11d right

Posted on 8th June 2021 by David Rudd

Ok, before we start, what on earth is a P11d?

A P11d is a part of small business payroll, it’s a form that summarises the “benefits” an employer provides to employees free of any tax.  These “benefits” attract employer’s class 1a national insurance and personal tax on the taxpayer who receives the “benefit”.

Some examples include the following paid by the company for the employee:

• Private medical insurance
• Company Vans available for private use
• Gym membership
• Company car (and fuel)

Over the years we have seen both sides of the argument when it comes to benefits in kind (from a small business perspective and HMRC).  Here are our 5 top tips:

1) Stop before you incur expenditure on behalf of your team

The easiest way to comply with HMRC rules around P11d’s is to not pay for expenditure which will create one.  A good example is providing fuel with a car, this is a very expensive benefit.

Seems like an obvious one but we know you’re busy running your business so it can be easier to just pay for something on behalf of your team.

Before you do, stop and think, will this be a benefit the team will not be paying tax on?

2) Put any benefits through your payroll

So you’re happy to pay for that expenditure for the team, what about putting the benefit through payroll? Great solution!

It means no P11d is due to be filed.  The downside – much more admin for your small business payroll and your accountant!

NB any taxes due will be collected on a monthly basis instead of in July (after the end of the tax year).

3) Prepare the numbers early

The Scouts approach of “Be Prepared” is the best advice here.

Preferably before you incur the expenditure get an idea and projection of what the P11d (and the associated taxes) will be.

Armed with this data you will then be in a much better position to understand the true cost of the expenditure to your business.

4) Ensure you file the P11d and pay any taxes

The filing deadline for the P11d forms is 6^th July following the end of the tax year (so for the tax year ended 5^th April 2021, you have until 6^th July 2021 to file).

The associated taxes need to be paid by 22^nd July following the end of the tax year.

Don’t forget to give a copy of the P11d to each member of the team who has a benefit in kind.

5) Get in touch with your accountant!

If you know you have paid for something on behalf of one of your team, let your accountant know.  The penalties for non-compliance with HMRC rules related to P11ds can be eye-watering.  Speak to your accountant sooner rather than later!

Need help?

Remember, the Steven Burton & Co team have many decades of experience between us helping business owners just like you. If you need a sounding board, some advice or a steer in the right direction, then get in touch.