P11D Benefits

Offering Your Employees Non-Cash Benefits? Don’t Sweat Your P11Ds!

If you provide your employees with benefits in kind the value of those benefits are usually taxable on both the employee and the employer. The benefits code also extends to any benefits provided to family members of the employee.

The value of the benefit is based on either the cash equivalent or the cost to the employer. The employee will pay income tax on the taxable benefits they receive at their marginal rates of tax i.e. 20% for basic rate payers and 40% & 45% for higher & additional rate payers. Employers pay tax at 13.8% on the taxable benefits they provide.

The most common benefits provided to employees are company vehicles, fuel interest free loans and private medical insurance but the rules extend to any asset placed at the disposal of a director or employee. This means that you could quite innocently make use of a company asset, fixed or current, without knowing that a tax charge lies ahead.

Certain employees are excluded from being taxed on benefits. Broadly these are those that earn less than £8,500. As the earnings limit takes account of any benefits provided as well as salary paid, a good understanding of what benefits are ‘taxable’ is needed to ascertain if the employee can be excluded from paying tax on those benefits.

Benefits are reported on the form P11d which is submitted to HMRC for each employee. A summary form P11d(b) for the employer is also sent to HMRC along with the P11d and is due by the 6th of July. The payment of class 1A national insurance is due by 19th July. Late filing penalties apply and penalties of u to £3,000 apply where P11ds are filed incorrectly.

Whether it is a query on what benefits are taxable or if there is a more effective way to provide those benefits and incentivise your team call us today on 0845 345 7785. ISIS can also assist with the preparation and filing the P11d’s to ensure your statutory obligations are met.

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