HMRC releases P11D guidance to clarify OpRA rules
HMRC has issued basic guidance on how to complete 2017-18 forms P11D returns for PAYE internet submissions, expenses and benefits, and stressed compliance with 2017 rule change to salary sacrifice arrangements
29 Jan 2019
The at-a-glance guide supplements detailed compliance information available in HMRC’s 480 expenses and benefits guide.
P11D and P11D(b) forms for 2017-18 can be completed online using PAYE online for employers’ service or online via the end of year expenses and benefits forms
There is no legal requirement to submit P11Ds for payrolled expenses and benefits.
P11D forms must be completed at the end of each tax year and employers must give HMRC details of any expenses payments, benefits and facilities given to each employee or director.
This includes expenses payments, benefits or facilities provided to members of the director’s or employee’s family or household.
For most purposes ‘family or household’ is defined as the employee’s:
- spouse or civil partner;
- sons and daughters and their spouses or civil partners;
- his or her parents;
- dependants; and
A separate form P11D has to be used for each individual and the same information has to be given to each director and relevant employee, again entered on a P11D form.
A P11D is not required if there are no taxable expenses, payments or benefits to be returned for an individual; the expenses and benefits have been taxed through payroll.
PAYE settlement agreements and exempt payments
You do not need to show expenses, payments or benefits in kind covered by a PAYE settlement agreement on a P11D, the exemption for paid or reimbursed expenses.
NICs reporting - Form P11D(b)
The amounts of Class 1A National Insurance contributions (NICs) due for the tax year need to be declared using Form P11D(b).
The form is split into four sections:
- the return of Class 1A NICs due for the year
- the declaration covering the return of Class 1A National Insurance contributions and expenses and benefits
- gives important information on how to complete the form
- for any adjustments to the total benefits liable to Class 1A NICs
Amount made good, or from which tax has been deducted
In boxes with this heading on the form P11D enter any amounts which have been made good by the director or employee on or before 6 July 2018 and/or from which tax has been deducted under PAYE.
A matching adjustment will have to be made to the total benefits reported on form P11D(b).
VAT must be included on P11Ds even if it may not be recovered in whole or in part from HMRC.
Optional remuneration arrangements
From 6 April 2017 the rules on optional remuneration arrangements (OpRA) changed, effectively reducing the number of benefits which could be given to employees using salary sacrifice.
Under salary sacrifice, an employee gives up the right, or future right, to salary (salary sacrifice), or the right to some other form of cash remuneration in return for the benefit. They include flexible benefit packages with a cash option.
Under the new regime, as of 2017-18 tax year, employers have to determine the amount of a benefit which is treated as earnings from the employment, where the benefit is provided as part of an optional remuneration arrangement.
Where a benefit is chosen instead of some form of salary or pay, the taxable value of the benefit and the amount liable for NICs is the greater of the amount of salary foregone and the taxable value of the benefit under the normal benefit in kind rules, ignoring any amount made good.
The return date for the P11D and P11D(b) for 2018-19 is 6 July 2019. A penalty regime operates for late filing and ‘if you are careless or deliberately submit incorrect returns on forms P11D and P11D(b)’, HMRC guidance states.
Report by Sara White
Optional remuneration arrangements (OpRA) - see ¶412-905 Optional remuneration arrangements (from 6 April 2017)