Reporting employee benefits and expenses
The forms P11D, P11D(b), and where appropriate P9D, which report employees and directors benefits and expenses for the year ended 5 April 2013, are due for submission to HMRC by 6 July 2013.
Employees pay tax on benefits and expenses as shown on the P11D, either via a PAYE coding notice or through the self assessment system. In addition, the employer pays Class 1A National Insurance contributions at 13.8% on the provision of most benefits.
HMRC have issued some guidance on the common errors on the forms in the latest Employer Bulletin and these can be accessed via the following link http://hmrc.gov.uk/paye/exb/index.htm Employer Bulletin.
Lessening the burden
Completion of P11Ds can be onerous for payroll departments. There are two measures that can be taken to reduce the burden:
An application can be made to HMRC which, if granted, removes the requirement to report many routine, tax allowable expenses. It can also avoid the necessity of employees making an expenses claim (S336 claim) for such expenses.
· PAYE settlement agreement
These are arrangements made with HMRC to enable tax to be paid by the employer on irregular benefits, such as staff rewards. This practical option allows staff to receive such rewards without the need to pay tax on the benefit themselves.
Rothmans can provide support with the reporting of expenses and benefits and provide valuable advice in reducing this burden. Contact us for more information.
Written by Habib Brora