Its that time of year again when bookkeepers, payroll administrators and accountants are preparing P11ds for businesses who reimburse employee expenses or provide their employees with benefits. P11ds for the period 6th April 2015 to 5th April 2016 have to be submitted to HMRC by 6th July with any payment due being made by 22nd July.
Some employers will have dispensations in place to cover reimbursed expenses and therefore may not need to complete a P11d but other, non allowable expenses and all benefits such as health insurance or a company car, still need to be reported. Further information about whether tax or national insurance is due on expenses and benefits can be found within HMRC's A-Z list of Expenses and Benefits.
From April 2016 several changes are being made to the reporting of expenses and benefits for the period 6 April 2016 to 5th April 2017:
- Dispensations will cease as tax and national insurance will not be due on expenses reimbursed as long as the exact expense is repaid.
- If expenses and benefits are provided as part of a tax free salary sacrifice agreement these will need to be paid after tax and NIC is deducted.
- Employees earning below £8,500 per annum will have their expenses and benefits which are subject to tax and national insurance reported on a P11d and not a P9D as previously as the P9D has been abolished.
- Trivial Benefits in Kind (BiK) will not need to be reported (subject to Parliamentary approval at time of writing). A trivial BiK must not be cash or a cash voucher, must be less than £50, must not be provided in return for services performed as part of employment, and must not exceed £300 annually if provided to the director of a close company.
Employees will still be able to apply to HMRC for tax relief on expenses which have not been reimbursed by their employer.