When might you need a P11D
Posted on 25th April 2023 at 10:57
We have found that there can be quite a bit of confusion around P11Ds and what circumstances people might need one, so we thought we’d write a blog to assist you in understanding them a bit better.
What is a P11D?
A P11D is a document used to list any benefits or additional income given to directors or employees by the business that does not go via the payroll. HMRC treats these benefits as extra income, so they have to be declared to HMRC and the tax paid accordingly.
A P11D needs to be submitted annually to HMRC and the individual’s tax code changes in order to collect the tax on the additional income.
What items should be included on a P11D?
There’s no definitive list but there are some typical items that people receive as part of their employment that we have listed below:
Company cars where they are available for private use
Fuel used for personal mileage
Fares or travel for non-business travel
Hotels or accommodation
Meals and non-business entertainment expenses
Season ticket loans (e.g. for trains)
Assets provided that are available for personal use
Interest-free and low-interest loans
What exemptions apply to P11Ds?
You don’t need to include the following expenses:
Travel expenses for business purposes
Business entertainment expenses
Credit cards used for business purposes
Professional fees and subscriptions
Does it apply to directors’ loan accounts?
If you have a directors’ loan account over £10,000 at any point during the tax year, HMRC will expect interest to be paid on the overdrawn amount. Up to 5 April 2023, this was 2% and from 6 April 2023, it has increased to 2.25% pa. The amount above £10,000 must be included on the P11D.
When do P11Ds need to be submitted?
Employers are required to file P11Ds by 6th July following the end of the tax year. So as an employer, you have until 6 July 2023 to complete any for the tax year 2022-23 for example. These are filed by the employer, not the individual, but a copy is issued to the employee. If you complete a self-assessment you will need to include this as part of your employment income.
Will tax be payable on the amount on the P11D?
The amount on the P11D represents additional employment income and it is therefore taxable. HMRC may collect the tax due on these taxable benefits through your tax code for the current tax year and your tax code may be adjusted for this reason.
The amount of tax you will pay will be dependent on your personal tax rate (20%, 40% or 45%).
The company will also pay Class1A National Insurance on the total value of the benefits it provides.
If you provide any additional income or perks or use of assets to your employees and you aren’t sure if you need to declare it, please let us know and we will check it for you.
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