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The P11D is a necessary form that UK employers must submit to HM Revenue and Customs (HMRC) each tax year. It reports the value of certain taxable benefits provided to employees and directors. This article will cover the main aspects of P11D, incorporating the technical updates and requirements mentioned in the previous article, to help employers stay compliant with the latest regulations.
What is a P11D: Employers use the P11D form to report taxable benefits given to employees and directors not covered by a payrolling arrangement with HMRC or a PAYE Settlement Agreement. Separate forms are required for each employee with taxable benefits.
P11D Submission Deadlines: The deadline for submitting P11Ds is July 6th following the tax year, and a copy of each employee’s Form P11D or the information it contains must be provided to the employee by the same date. For example, P11Ds for the 2022/23 tax year must be submitted by July 6, 2023.
Key Technical Updates for the 2022/23 Tax Year
Online Submission Requirement: Starting from the 2022/23 tax year, employers must submit P11Ds online instead of using paper Forms P11D and P11D(b). HMRC will reject any paper forms received. Employers have two options for online submission either through HMRC-approved commercial software or HMRC’s PAYE Online Service (free)
Before exploring new software, verify if your payroll software provider includes complimentary P11D filing software to avoid re-entering employer and employee payroll details.
Blended Class 1A National Insurance (NI) Rate: Due to the 1.25% increase in NI at the start of the 2022/23 tax year and its subsequent repeal from November 6, 2023, a blended Class 1A NI rate of 14.53% must be used when calculating Class 1A on Form P11D(b) instead of the 13.8% rate in effect at the end of 2022/23. This new rate applies to both payrolled benefits and those reported on Forms P11D.
Penalties for Late Submission or Payment: Employers need to be aware of the penalties imposed for late submission or payment:
- Late filing penalties: £100 per month (or part month) for every 50 employees.
- Late payment penalties: HMRC may charge interest on late payments of Class 1A NI.
How to Stay Compliant
To ensure compliance with P11D requirements, employers should take the following steps:
- Review the benefits provided to employees and directors and determine which ones need to be reported on a P11D.
- Keep accurate records of the value of benefits provided throughout the tax year.
- Ensure that P11Ds are submitted online using either HMRC-approved commercial software or the HMRC PAYE Online Service by the July 6th deadline.
- Provide employees with a copy of their P11D or the information it contains by the same deadline.
- Calculate and pay the blended Class 1A NI rate of 14.53% on Form P11D(b) for the 2022/23 tax year.
Monitor revised tax codes from HMRC for employees who have been provided with any benefits to account for any unpaid tax on the benefits from the previous tax year.
- Stay up-to-date with the latest HMRC guidance and any changes in P11D regulations to ensure continued compliance in the future.
- Educate your payroll and human resources teams on the P11D submission process and the importance of timely reporting.
- Consider investing in payroll software that includes P11D filing features to streamline the process and reduce the risk of errors.
- Consult with a tax professional if you have any questions or concerns about P11D compliance, especially if you are a new employer or have recently started offering taxable benefits to your employees.
Understanding and complying with P11D requirements are essential for employers to avoid penalties and ensure that employees are accurately reporting their taxable benefits. By staying informed about key technical updates, such as the online submission requirement and the blended Class 1A NI rate for the 2022/23 tax year, employers can confidently navigate the P11D process and maintain compliance with HMRC regulations.