We are sharing this update from ACCA, our professional body, for the interest of clients and contacts. The content is (c) ACCA
Reducing errors will ensure more accurate reporting and avoid costly compliance issues
With HMRC tightening digital filing requirements and increasing penalties for incorrect submissions, employers and agents must pay closer attention to common P11D mistakes and omissions to ensure accurate reporting and avoid costly compliance issues.
For the 2025/26 tax year (ending 5 April 2026), P11D and P11D(b) returns must be filed digitally by 6 July 2026. Paper forms are no longer accepted; submissions must be made via HMRC’s PAYE Online service or commercial payroll software.
All employers must submit the following forms online to HMRC:
- form P11D for each employee in receipt of benefits in kind which have not been processed via the payroll; and
- form P11D(b), reporting the total amount of class 1A national insurance contributions (NIC) payable by the employer on benefits in kind. It is still necessary to submit form P11D(b) even if all benefits have been processed via the payroll.
Class 1A NIC must be paid by 22 July if paying electronically, or by 19 July if paying by cheque.
HMRC guidance specifies that the P11D should include:
- the employer’s reference
- the employee’s name and NI number
- if the employee’s NI number is not known, it must provide their date of birth and gender
- where a car has been provided to an employee, it must include its list price. From 6 April 2025, double cab pickups with a load capacity of at least one metric tonne are no longer treated as vans for benefit in kind (or from 1 April 2025, for capital allowances) purposes and instead are treated as cars. Transitional arrangements apply to vehicles purchased, leased or ordered before 6 April 2025 which allow them to continue being treated as vans until the earlier of disposal, lease expiry, or April 5, 2029
- where box 10 in section F (total cash equivalent of car fuel provided) is completed, box 9 (total cash equivalent of cars provided) must also be completed
- where a beneficial loan to an employee has been provided and it is reported in section H, box 15 (cash equivalent of loans) must also be completed (in cases where an employee has more than two loans, the employer is allowed to attach a copy of the P11D WS4 working sheet and write ‘see attached’ in box 15 in section H and so the form should not be rejected for this reason).
Even where employees have reimbursed expenses or low-value benefits are provided to employees, they should be included on the P11D return. Common omissions include private medical insurance, beneficial loans, gym memberships, living accommodation, and non-business travel expenses.
Hybrid working arrangements have also increased the risk of errors. Employers should carefully distinguish between qualifying business expenses and taxable homeworking benefits, particularly where equipment or allowances exceed HMRC exemption limits.
The trivial benefits exemption remains useful but is frequently misunderstood. To qualify, benefits must cost £50 or less, not be cash or cash vouchers, and not be provided as a reward for services. Seasonal gifts, staff lunches, and small gestures of appreciation may qualify, but businesses often fail to apply the exemption conditions correctly or maintain sufficient supporting evidence.
Directors of close companies should also note the annual cap of £300 on exempt trivial benefits. Each individual benefit must not exceed £50 (including VAT), cannot be cash or cash vouchers, and must not be a reward for performance or contractual.
HMRC may impose penalties for both late and incorrect filing. If a P11D(b) is filed late, a charge of £100 per month (or part of a month) applies for every 50 employees, or part thereof, until the return is submitted. For incorrect P11D forms, a penalty of up to £3,000 may be levied per form. If the business has incurred a penalty for late or incorrect filing, they may appeal on the reasonable excuse grounds, if applicable.
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