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Guide to benefits in kind and the P11D form for contractors

If you are an employer, you need to file an annual P11D form for employees who received any benefits in kind from the company during the previous tax year.

Benefits include things like a company car and healthcare—expenses that benefit the employee in addition to their salary.

Unsurprisingly, as benefits in kind benefit employees rather than the business, both the business and the employee pay extra tax on the value of these perks.

If you’re a company director, your accountant will usually file the P11D, but we recommend that you read on, as directors are ultimately responsible for the accuracy of all HMRC submissions

Who has to file a P11D and P11D(b)?

It is the employer’s responsibility to file a P11D. If you run your own company, you are also the ’employer’, so it is your responsibility to file – if required.

The company must also file a P11D(b) form if you have submitted any P11D forms or paid benefits to any employees (and directors) via the payroll during the previous tax year.

This includes benefits provided to an employee’s family and household.

When you don’t need a form P11D

Businesses can also collect tax on certain employee benefits via PAYE when the payroll is run.

Examples of benefits where this P11D exemption applies include business travel, uniforms and entertainment expenses.

If an employee has already been taxed in this way or has no taxable benefits or expenses for the year, you don’t have to submit a P11D for that employee.

Which benefits to report on a P11D

Some typical employee benefits that need to be reported on a P11D include:

  • Company cars and fuel.
  • Mileage allowance if not already taxed via PAYE.
  • Company van provided for personal use.
  • Private medical insurance, including dental expenses.
  • Interest-free loans exceeding £10,000 at any point during the tax year.
  • Director’s loans exceeding £10,000 at any point during the tax year.
  • Assets or facilities placed at the employee’s disposal and with a clear personal benefit (see below).
  • Relocation expenses, payments and benefits above a certain level.

The list above is not exhaustive, and exemptions may also apply. See this comprehensive HMRC list for more details.

Assets made available for employees to use

Since April 2017, employees are taxed on company assets made available to them for private use on a pro-rata basis.

Beforehand, usage was taxed on the basis of the asset being available to them for the whole year, even if this wasn’t the case.

It’s important to note, this only applies to those assets where there is no transfer of ownership.

Don’t miss the P11D deadline or pay a penalty

Your P11D forms need to be filed electronically with HMRC by 6th July following the end of the previous tax year.

Any tax due must be paid by 19th July or 22nd July if you pay electronically.

If you miss the 6th July deadline, you won’t be penalised immediately. However, if you faily to submit your forms within around 2 weeks, HMRC will fine you £100 for each overdue month.

If there are errors on your P11D, HMRC also has the power to issue further penalties.

Make sure you also provide all of your employees with a copy of their P11D.

Tax on benefits provided to employees

The company pays employers’ national insurance @ 13.8% on the value of benefits provided to its employees.

If you’re an employee, you pay additional income tax on the value of any benefits you receive.

What if you’re a sole trader?

You don’t need to file a P11D if you’re a sole trader or member of a partnership with no employees.

Partner Contractor Accountants

Last updated: 13th March 2024