Don’t be caught out over benefits and reporting rules
With the new tax year now under way, there are a range of end of year reporting requirements that employers must fulfil, including details of any benefits given to employees. Our expert is here to help you navigate the P11D maze and determine what you should be adding to your list…
11D season is well and truly upon us! While HMRC has announced plans to make the payrolling of benefits in kind (BIKs) mandatory from 6 April 2026, unless you already payroll, employers must still submit P11D forms for employee benefits in 2023/24 by 6 July 2024.
If you have already taken the plunge and currently payroll benefits, you still have to quantify them to calculate the Class 1A NIC due on 19 July, or 22 July if paid electronically.
Electronic filing
In February 2023, HMRC announced without warning that unless exceptional circumstances applied, all future P11Ds would have to be submitted electronically using software or HMRC’s own portal.
In addition, making amendments to P11Ds for previous years would only be possible using HMRCs portal.
Initially, this might have come as good news to those who had to complete manual P11Ds. However, a quick play with the HMRC portal demonstrated that using it is a slow way to file P11Ds.
Fortunately, there are lots of P11D software packages on the market that can help make the job easier, including BDO’s own – see details by scanning the QR code on the page opposite.
What benefits need reporting?
Company cars remain one of the most reported BIK, with the value based on their manufacturer’s list price and CO2 emissions. If fuel is provided, a BIK based on the CO2 and a multiplier – currently £27,800 – is also applied.
One piece of good news this year is that HMRC U-turned quicker than your standard twin cab pick-up (TCP) when they announced plans to treat TCPs as cars from 1 July 2024.
Given that most TPCs don’t have good CO2 ratings, the initial announcement brought about a real chance of the BIK doubling.
A van BIK, which applied to most TCPs, is a fixed scale charge regardless of the manufacturer’s list price and CO2 emissions.
However, thanks to lobbying – primarily by the farming unions – HMRC has confirmed that the rules remain unchanged and most TCPs will continue to be treated as vans.
Of course, reporting van BIKs on a P11D will still be required when there is no restriction to the personal use of the van.
“a reminder to business owners that if you had a director’s loan account with a debit balance of over £10,000 at any point in the tax year, a BIK will be reportable”
Under the van rules, and unlike the use of a car, normal commuting mileage – i.e. getting to and from work – is not classed as private use. So as long as other private use is minimal, no BIK arises. If private use is not restricted and fuel is also provided, a van fuel scale charge will also be reportable.
Medical insurance rounds off the three most popular BIKs reported, and you must report the annual premium paid on behalf of the employee.
Finally, a reminder to business owners that if you had a director’s loan account with a debit balance of over £10,000 at any point in the tax year, a BIK will be reportable. You can read more details about this in our online P11D tips section by scanning the QR code on this page.
Time to get started
Apologies for ending on a dark note, but it’s important to flag up a word of warning for all SELECT Member firms.
Failure to submit P11Ds on time can result in penalties which increase by the number, due in batches of 50, as well as interest if Class 1A is paid late. So don’t delay!
Useful links
Easy to install, HMRC-recognised P11D software solution for producing and filing accurate employee benefits reports, updated for the latest tax year.
Easy to follow advice on loan benefits, exemptions, loans under optional remuneration (OpRA) and calculating the benefit.
BDO is an accountancy and business advisory firm, with a global network that operates in 167 countries with 1,600 offices worldwide. For further details, go to www.bdo.co.uk
