If an employer provides expenses or benefits to employees or directors, then at the end of the tax year you’ll usually need to submit a P11D form to HM Revenue and Customs for each employee you’ve provided with expenses or benefits. This also includes payments or benefits made to any members of their families, like spouses or their children.
Examples of expenses and benefits include:
- Company car where you are allowed to use it for personal use
- Fuel for the company car where it is provided by your employer, and you are free to use it for your personal use
- Health insurance
- Gym membership
- Childcare or school fees for employees’ children
- Assets provided to employees, like mobile phones or laptops
- Non-business travel and entertainment expenses
- Accommodation which has been provided rent-free or below market rent AND where you are not required to live there to perform your job role
- Gifts or holiday vouchers that exceed the annual allowance
- Interest-free or cheap loans provided to you as an employee from the company or business where the amount is over £10,000
- Relocation expenses that exceed the £8,000 allowance
- Payment of accounting fees on behalf of the employee
Who and what do I need to pay?
The employee who receives a BIK (benefit in kind), will be charged income tax. To calculate how much is owed you need to determine the employee’s income tax rate band (20% for basic rate, 40% for higher rate or 45% for additional rate).
Employers who provide BIKs to their employees will need to pay tax in the form of employer’s NI at a rate of 13.8%.
Deadlines
Company needs to submit P11D forms online to HMRC by 6 July following the end of the tax year.
Company needs to provide their employees a copy of the information on your forms by 6 July.
Company must pay any Class 1A National Insurance owed, payment must reach HMRC by 22 July.
Employee will pay tax via their personal tax return or HMRC will change individuals tax code and amount will paid off via payroll in the following tax year.
