You may have recently received a ‘P11D’. The deadline for you to receive these is the 6th July each year.
These important documents (in paper, or now more often in digital form) show you the details of any taxable benefits. These are benefits, such as medical insurance or a company car, which you may have received in the tax year.
Whether you are an employee, director, employer or self-employed person, it’s worth being aware of the impact they may have on your tax, and earnings.
Are you an Employee?
HMRC collect tax on the benefit provided via your tax code.
As an employee, HMRC will usually alter your tax code based on the information from the P11D.
They will usually alter your tax code to collect more tax in the coming/current year. They will expect you to receive the same benefit.
If this is the first time you have received a benefit, they may also adjust your tax code to account for the tax owed on last year’s benefit. Check for coding notices informing you of any changes.
There is a recent change to this process where your employer is able to ‘payroll’ your benefit.
Each payslip has tax applied on a proportion of the annual amount, instead of through a tax code. In this instance you will not therefore receive a P11D.
Take a look at your most recent payslip. If your tax code isn’t the ‘normal’ tax code for the year (1250L this year in 19/20), it’s worth a quick call to HMRC to find out what is being adjusted into your code.
HMRC are renowned for incorrect codings. The most common reason is for historic information which has not yet been updated, so it’s always worth double checking.
Are you an Employer?
Employers pay Class 1A National Insurance Contributions on benefits provided to employees, which is currently 13.8%.
You, as an employer have to prepare P11Ds for your employees (for non ‘payrolled’ benefits – see above). You will also have to submit a P11D(b) return which tells HMRC how much Class 1 A National Insurance contributions they need to pay to HMRC (by 6th July each year).
These contributions need to be paid before the 19th of July each year (22nd if paid electronically).
They must supply form P11d (where applicable) to employees by the 6th of July.
Are you a Director?
In theory, you are an employee, but quite often you may not be paying any tax from your salary, due to having set your pay at a very efficient rate.
You may also be in receipt of dividend income and therefore having to complete a tax return.
P11D benefits are entered into your tax return, and any tax due is included in your tax calculation as a result.
Are you Self-Employed?
As a self-employed person you will not normally have these, but you may have a part time job where you receive some taxable benefits.
If this is the case, similar to a director above, you would enter them into your tax return.
This particular scenario can be a little tricky as HMRC will often adjust the tax code on income from your part time job to adjust for the benefits. This is of course not ideal!
If you have any queries on the above, especially if you are a director, employer or self-employed person, please call our team on 02392 240040.