Reporting benefits and expenses

HMRC has made it clear that employers  must submit their reports of benefits and expenses provided to employees  (P11D forms) in electronic form this year.  All paper P11Ds will be rejected, as will  any paper amendments to P11Ds for  earlier years.

There are now only two options open when reporting benefits and expenses; Commercial software; or

•HMRC’s PAYE online service – suitable for up to 500 employees on one payroll. 

The deadline for submitting the P11D  information for the tax year to 5 April2023 is 6 July 2023. We can help you  with this task. 

Where employer’s NICs are due  on the value of benefits provided, this  payment must reach HMRC by 22 July  2023, if you pay electronically. 

If you find the P11D process a total  pain, you could opt to tax the value of the  benefits through the payroll during the  year –this is called “payrolling benefits”. 

Under payrolling, the taxable value of the benefit for the pay period is added  to the employee’s taxable pay. The income tax due is then deducted from  their gross pay in real time and paid to  HMRC. The employer’s NICs are still paid  after the tax year-end as now, so a form

P11d(b) must be submitted . The advantages of payrolling benefits are,

•No P11D is required for the  employees within payrolling.  Employees don’t get a nasty shock of a tax bill after the year-end;

•There are no surprising amounts in  tax codes issued the following year;  All benefits are visible on the  employees’ payslips.

•It reduces the risk of errors, as the  employee can see the benefit on  each payslip and query it if  necessary.

Almost all benefits can be payrolled, the exceptions being beneficial loans and  employer-provided accommodation.  Payrolling company car benefits removes the need to submit a P46(car)  when a car is first provided to an  employee. 

In order to start payrolling benefits  for the tax year 2024/25, you need to  apply to HMRC by 5 April 2024. you will need to give your employees a factsheet to explain what is payrolled.

Please contact us if you want further information about payrolling benefits or have any questions as to the taxable  value of a benefit.