A refresher on the treatment of benefits, form P11D and relevant deadlines.
Employment benefits fall into the following broad categories:
- Salary, which is taxed through to payroll when the money paid to the employee is usually monthly or weekly.
- Taxable benefits in kind such as a company car, accommodation, loan at a reduced rate of interest and various other items, all of which should be reported on form P11D.
- Shares in the employer company (or group) or options to buy such shares in the future. There are various tax schemes made available by HMRC which, if used by the employer, can reduce the tax which would otherwise be payable by the employee.
- There are various tax free benefits which can be provided by the employer to the employee. These cover benefits such as health screening, late night taxis, training courses, sports facilities and many more. See the June issue of In Practice for a comprehensive list of these tax free benefits.
The employment benefits reported on a form P11D include the following:
- Assets transferred from the employer to the employee
- Payments made by the employer on behalf of an employee
- Vouchers and credit cards made available to the employee
- Living accommodation provided by the employer to the employee
- Mileage allowance payments not taxed at source
- Cars and car fuel provided by the employer for use by the employee
- Vans and van fuel provided by the employer tor use by the employee
- Interest free and low interest loans provided by the employer to the employee
- Private medical treatment or insurance.
- Qualifying relocation expenses payments and benefits
- Services supplied by the employer to the employee
- Assets placed at the employee’s disposal.
- Other items (such as subscriptions and professional fees)
- Expenses payments made on behalf of the employee.
The employer should submit all P11Ds and one P11D(b) form to HMRC by 6 July following the relevant tax year (for the tax year 2017/18 deadline in 6 July 2018). Form P11D(b) is used to declare the amount of Class 1A NICs the employer is due to pay for the tax year. The form is required if the employer is liable to return any expenses payments or benefits on form(s) P11D. The deadline for giving employees a copy of their form P11D is also 6 July following the end of the tax year.
The Class 1A National Insurance Contributions should be paid to HMRC by 22 July (or 19 July if paying by cheque) following the end of the tax year.
Employers pay Class 1A National Insurance contributions on all the above except items (b), (c), (e) and (n).
The P11D guide for the tax year 2017/18 explains how the taxable benefits listed above are calculated and how these should be entered on form P11D.
Further useful guidance from HMRC is in Booklet 480: expenses and Benefits – A Tax Guide and Booklet 490: Employee Travel – A Tax and National Insurance Contributions Guide
Employee share schemes
The tax treatment of employee share schemes will depend on whether the scheme is a registered scheme for tax purposes and the type of scheme. View this handy introduction to the various schemes.
Article from ACCA In Practice