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Understanding your P11d

What is a P11d?

A P11d is how we tell HMRC about benefits received by employees of your company. They need to know this information so they know how much income tax you should be paying and also to calculate Class 1A National Insurance (which is based on 13.8% of the value of the benefit).

The P11d and the summary document P11db needs to be sent to HMRC by 5 July following the end of the tax year. So the 2014/15 (6 April 2014 to 5 April 2015) tax year should be reported to HMRC by 5 July 2015.

Note that the P11d is not your income tax return, it’s just a summary of employee benefits, though the P11d does feed into your income tax return.

Does your company need to complete a P11d?

You will need to complete a P11d if any of the following apply:

  1. You received any benefits during the year (eg a company car, health insurance);
  2. You received out of pocket expenses from the company and do not have a P11d dispensation in place; or
  3. HMRC have asked you to complete one.

What’s a P11d dispensation?

If you don’t have a P11d dispensation you need to report all out of pocket expenses to HMRC even if they were for business purposes. So if you bought a business flight for £500 personally and recharged this amount to the company you would report this on the P11d. There wouldn’t be any tax due as a result of this payment but it still needs to be reported. Accountants are all in agreement that this is a big waste of time!

To save this time we apply for a P11d dispensation for all clients. This tells HMRC that the employees do receive out of pocket expenses but an accountant does check the payments and ensures they are for business related purposes (so not a taxable benefit). If this is in place we do not need to report out of pocket expenses on the P11d. Not all our clients have one though, we apply for them on an annual basis and sometimes HMRC reject them for no good reason and sometimes clients join us after the last batch submission. If you are unsure if you have one in place or not ask your Caprica Accountant.

Even with a P11d dispensation, you still need to report benefits such as a company car though.

What counts as a benefit?

A benefit is effectively anything except salary/bonus that you receive from the company that you use personally. The classic examples are:

  1. A company car
  2. Gym membership
  3. Cash-like vouchers (eg Amazon vouchers given to an employee for good performance)
  4. Health insurance
  5. Life insurance

If you receive something from your company and are not sure if it should be classed as a benefit then please ask your Caprica Accountant and they will be happy to advise.

The ‘value’ of the benefit of a company car?

In most cases working out the value of a benefit is simple, it’s how much cash it cost the company. So if the company pays a gym membership fee of £50 per month, the annual benefit is £600 (£50 x 12).

Company cars are a weird case where instead of the cash value a complicated formula is used. The biggest element of this calculation is the CO2 emissions of the car. So you can have a situation where a super-efficient £70,000 Tesla results in a benefit in kind of £0 per year, whereas a fuel-hungry £10,000 used Range Rover results in a benefit of £5,000 per year.

Company car fuel

If your company also pays all fuel costs for your company car, whether it’s being used for personal or business use this counts as an additional benefit and is again based on a complicated CO2 formula.

How to review your P11d

If you have received a P11d for approval from your Caprica Accountant it means that we think you receive benefits (or out of pocket expenses without the P11d dispensation) or that HMRC has asked you to complete a return.

In our email asking for approval we list out all the benefits that are included on the return and the value of those benefits. We also attach the P11d itself (one per employee) and a P11db that summarises the total benefits on each P11d.

You should check:

  1. Are the values attributed to the benefits correct – in the case of a company car have we correctly identified the make, model, CO2 emissions and whether you also receive fuel. You will see this information on the P11d itself.
  2. Have we missed any benefits? – If so, please let us know. If you are unsure whether or not something counts then let us know about that too.
  3. Have we attributed the benefits to the correct employees?

If everything looks in order then simply reply to the email saying you are happy for us to submit and your job is done.