P11Ds and payrolling benefits

With the 2018/19 P11D deadline looming, Croner Taxwise payroll adviser Samantha O'Sullivan examines the pros and cons of payrolling benefits, plus key registration and filing dates

If you’re an employer, you need to submit an end-of-year report to HMRC for each employee provided with benefits which have not been included in wages. Use form P11D to send the report to HMRC for employees and directors.

The deadline for reporting P11Ds to HMRC is the 6 July following the end of the tax year. This is also the date you must provide employees with a copy of the P11D and tell HMRC the total amount of Class 1A National Insurance owed on form P11D(b).

Please be mindful that in 2019, 6 July falls on a Saturday.

Reducing red tape

You can now payroll benefits provided to employees as long as you register to do this with HMRC before the start of the tax year that you wish to payroll the benefits. Register using the payrolling benefits and expenses online service.

When benefits are payrolled, the cash equivalent of the employees’ benefits is added to their pay and they are taxed on benefits through the company’s payroll.

If you miss the registration deadline, ask HMRC to informally payroll benefits. Apply in writing to: Complex Caseworker Team, National Insurance Contributions and Employer Office, HMRC BX9 1BX 

Employers that informally payroll benefits must still complete form P11D at the end of the tax year and mark each P11D ‘Payrolled’. This will stop HMRC collecting tax that has already been deducted from employees.

Advantages of payrolling benefits

If benefits are officially payrolled, as an employer it is not necessary to produce P11Ds for employees. However, you have to calculate the Class 1A National Insurance contributions (NICs) and complete form P11D(b) by 6 July following the end of the tax year.

The main benefit for employees is that their tax will be collected in real time, rather than being collected through an adjusted tax code following the end of the tax year.

Samantha O'Sullivan is a payroll adviser at Croner Taxwise Tel: 0844 892 2470

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