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What is a P11D Form and Do You Need to File One?

While many of us have a lot on our minds at the moment, there’s an important deadline coming up fast that we’d like to remind you about.

The P11D form submission is due in just a few short weeks, so we’ve put this guide together to help you understand what it is, when you need to file it and if there are any penalties if you file late.

What this article covers:

  • What is a P11D?
  • What is a P11D(b) form?
  • When do the P11D forms need to be filed?
  • Late filing penalties
  • Common P11D mistakes

What is a P11D?

A P11D is a form you need to fill in to report benefits in kind. Benefits in kind are services or items which yourself or your employees have received from your company in addition to a salary.

For example, this could be company cars, loans, non-business travel expenses, entertainment expenses or private healthcare.

The P11D form allows you to report all of these expenses separately to HMRC on your Self Assessment return.

What is a P11D(b) Form?

Another thing you’ll need to do is submit a P11D(b) form too. This is simply a form employers have to submit which summarises all the individual P11D forms they’ve submitted on behalf of their employees.

When Do the P11D Forms Need to Be Filed?

All P11D forms need to be filed on an annual basis with the deadline on the 6th of July, the following tax year. That means if you traded in the 2019-2020 tax year, your P11D deadline is this July.

Late Filing Penalties

Naturally, with most tax paperwork that needs to be filed, there is a cost associated with filing late.

While you won’t necessarily be hit with instant penalties, you can expect them to kick in around two weeks after the July 6th deadline. Typically, these fines are £100 a month per every 50 employees you have.

Common P11D Mistakes to Watch Out For

Phone usage

If your employees have had to make calls from their home phone or a mobile phone for business purposes - and you’ve reimbursed them - you will need to include this on your P11D form.

Make sure you keep a record of all your business phone usage and ask your employees to do the same. The easiest way to keep track of this is to invest in company mobile phones. That way, there’s little confusion between personal and business usage.

Directors’ loan accounts

If you as the director owe the company money in a directors’ loan, this is still considered an employment benefit - much like it would with a regular employee. Therefore, it needs to be included on a P11D form.

If you owe more than £10,000 in a directors’ loan, you will need to pay interest on the overdrawn amount. This is charged at a rate of 2.25% for the 2010/21 tax year.

Another thing to know is that your company will also need to pay Class 1A National Insurance on those interest payments (current rate is 13.9%) and also submit a P11D(b) form to HMRC.

General forgetfulness

It’s easy to forget to keep records on all employee benefits and expenses. However, accurate records are essential and can get you in a fair amount of trouble if you neglect them. Make sure you’re regularly reconciling your accounts so you can find problems early on and rectify them.

It’s a lot to remember and it often trips business owners and directors up. In this case, it’s always handy to have an accountant on board to ensure you’re filing all the paperwork you need to on time and accurately.

If you’re looking for a new accountant, get in touch with Countplus today and our team of friendly accountants will help you with all your tax needs.