Expenses & Benefits

As we are approaching P11d time, I thought I'd give an overview of expenses and benefits and a director's reporting responsibilities.

If your company provides expenses or benefits to employees (this includes directors), such as company cars, health insurance, travel and entertainment expenses or childcare then it needs to report this to HMRC and tax and NI must be paid on the taxable amount. Be aware, different benefits/expenses have different rules.

Each employee/director will need a P11d form to be sent to HMRC, accountants can do this using commercial software. Employers will also need to send a P11d(b) form which details the employer's NI they need to pay over on the taxable amount.

The benefit value will usually be deducted from the employee/director's tax code in following years. Another way of doing it is if the company payroll the expenses by adding a notional amount of wages to the employee's salary and then deducting the correct amount of tax.

A PAYE Settlement Agreement can be requested from HMRC for minor, irregular or impractical employee expenses or benefits.

Deadlines for this tax: P11d forms need to be submitted by 6th July and NI paid over by 22nd July.

As with all tax, accurate records must be maintained and in this instance kept for three years.

Exemptions for reportable expenses are for things paid at the prescribed HMRC rate or for amounts which simply reimburse an employee/director's costs, such as business travel, phone bills, business entertainment expenses, uniform and tools for work. You don't have to apply for these exemptions, they are automatic.