Taxable benefits and how to report them

We are in the process of preparing clients P11D’s for the 2020/21 tax year. We thought the below information would be useful to help you determine any benefits you need to report.

What are P11D taxable benefits?

If you provide certain benefits to any company employees or directors then this may generate a taxable benefit that needs to be reported to HMRC.

Here are some examples of taxable benefits:

• Business Mileage – if paid above HMRC approved rates
• Company Cars & Vans
• Interest free or a low interest loan
• Private medical / Dental insurance
• Assets provided for personal use
• Personal payments – e.g. school fees, gym membership, home phone charges
• Company credit cards provided for personal use
• Living Accommodation
• Relocation Expenses (£8,000 exemption in certain cases)
• Shares at less than Market Value
• Trivial benefits

What are Trivial benefits?
There is a statutory exemption for ‘trivial benefits’ given to an employee.

A trivial benefit is one that:

• Costs £50 or less to provide (including VAT)
• Is a retail store voucher that is not convertible into cash
• Isn’t a reward for service e.g. Birthday, Christmas, Wedding anniversary etc.
• Isn’t in the terms of the employee’s contract
• Is not reimbursed
• Isn’t part of a salary sacrifice arrangement

There is no limit on the number of trivial benefits that can be provided in the tax year for an employee.
Where the individual is a director of a close company the total value of trivial benefits cannot exceed £300 per annum.

Examples of common trivial benefits are:

• Christmas Hampers
• Vouchers for high street stores
• Tickets to a football game
• Wedding Anniversary gifts
• Tickets to the theatre

How are these benefits reported?

A P11D provides details of any taxable benefits that an employee receives to HMRC.

A P11D is generated for each employee and needs to be distributed to each individual by the employer by 6th July 2021. The amount that is reported will be included in the employees’ tax code which will be updated once HMRC have received the submission.

A P11D(b) is generated for each company which reports the total taxable benefits from all employees. This must be submitted to HMRC by 6th July 2021. There will be Class 1A NIC due on this amount which is calculated at 13.8%. This is payable by the employer and must be paid by 19th July 2021 (if payment is made via cheque) or by 22nd July 2021 if payment is being made electronically.

P11D’s not submitted by the due date will incur an automatic late filing penalty of £100 per 50 employees (which does increase the later the return is submitted after the initial due date).

Further information can be found on the HMRC website here. If you have any queries then please do not hesitate to get in touch with our team here.