The P11D form is used to report benefits in kind (benefits that employees or directors receive from their company which aren’t included in their salary or wages.). These are items or services employees receive in addition to their salaries, such as private healthcare, interest-free loans (to pay for train season tickets, for example) and company cars. The annual P11D form allows employers to report these items to HMRC on the annual Self-Assessment return.
As benefits in kind effectively increase your salary, employer may need to pay National Insurance contributions (NICs) on them. It is important to emphasize that the employer and not the employee pays the NICs.
P11Ds are filed by the employer, not the employee – although, for many freelancers and contractors, they’re the same.
P11D must all be filed by 6th July following the previous tax year. The P11D for the tax year running 6th April 2018 to 5th April 2019 must be filed by 6th July 2019. Any tax due must be paid to HMRC by the 22nd July each year.
Generally speaking, any items the company pays for and that the employee benefits from need to be included on the P11D form. Expenses and benefits that need to be reported to HMRC are:
Company cars, loans for rail season tickets, other loans, health insurance, assets provided to an employee that have significant personal use, Self Assessment fees paid by the company, non-business travel expenses, non-business entertainment expenses
There are exemptions for certain expenses that do not need to be included on the P11D such as:
Business travel, business entertainment expenses, credit cards used for business purposes, fees and subscriptions.
Directors’ loan accounts
Directors do not need to pay interest on the money they owe to the company – provided the director’s loan is less than £10,000.
If the directors’ loan account is overdrawn by more than £10,000 at any point in the tax year, HMRC will expect interest to be paid on the total overdrawn amount. This should be charged at the HMRC published rate of interest in the applicable tax year and will need to be paid by the relevant director.
The overdrawn amount is effectively a loan from the business to the director, is treated as an employment-related benefit and must be included on the relevant director’s P11d Form.
If a director needs to pay loan interest on an overdrawn directors’ loan account, then the company will also need to pay Class 1A NICs on the interest payments. The company will also be required to complete