P11D tips – Payrolled benefits? Don’t forget your P11D(b)
01 July 2019
Published by: Stuart Daltrey, Director – Employment Tax
It has been possible for employers to tax the value of employee benefits through the payroll since April 2017. While this can save on year-end administration, there are still some important points to remember if you opted to payroll benefits for the first time in 2018/19.
All benefits can be ‘payrolled’ with three exceptions – credit cards/vouchers, living accommodation, and beneficial loans. So if you provide any of those benefits you will still need to file P11Ds for 2018/19.
Form P11D(b) is a dual purpose return. It is a declaration that all the P11Ds are correct and complete and a return of the Class 1A NIC payable. Therefore, unless you payrolled every single benefit given to employees during 2018/19, you will still have a Class 1A NIC liability and will still need to prepare and submit a P11D(b) to HMRC and pay the NIC due.
When completing the Class 1A NIC element of the form, the first step is to add up all the entries in the brown boxes from all the P11Ds. The P11D(b) itself refers to this entry as: ‘the total benefits liable to Class 1A NIC from forms P11D’.
If this were completely accurate the process would be straightforward, but it is often the case that the figure will need to be adjusted, for example, adjustments may be appropriate where:
- Employees go to work abroad or come from abroad to work in the UK – the adjustment depends on the circumstances
- The benefit (cash equivalent) reported has been reduced by an amount from which tax has been deducted – a positive adjustment
- Special Class 1A NIC rules apply to cars and car fuel – a negative adjustment
- A substitute P11D list has been submitted to HMRC for a benefit not shown on forms P11D - a positive adjustment.
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