P11D(B) & P11D Season

It will soon be the end of the tax year, and the P11D season will begin.  It is important that each business reviews the expenses and benefits provided to employees and submits the P11D(b) to HMRC by the deadline of 6 July.

Businesses that have payrolled benefits over the 2019/20 tax year, should be aware that they are also required to submit the P11D(b).

Failure to submit the P11D(b) by the deadline will result in a £100 penalty per 50 employees.  Delayed submission will also incur further monthly penalties.

Expenses

An expenses policy is fundamental to a business’s expenses process. It should provide guidance on what expenses can be claimed by employees, approval processes and the process for reimbursement of the expenditure.

Since the 6 April 2016, businesses that pay for or reimburse business expenses are automatically covered by an exemption and are not required to report these. This system replaced the old system of dispensations.

Benefits

Non-cash awards such as the provision of a company car or private medical insurance are known as benefits in kind.  The value of benefits in kind is either the direct monetary value to the employee, such as the cost of a voucher, or it is the cash equivalent of the benefit as decided by the benefits code, such as for company cars.

While there are many taxable benefits in kind, it is important to know which benefits are tax free.  We have selected a few which may be of interest below:

Use of a company van available only for home to work travel – Where private use is restricted to only home to work travel, there is no taxable benefit in kind.  Remember that a double cab pickup is also treated as a van for these rules.

Company Cars – Fully Electric – The draft legislation for 2020/21 shows that fully electric cars which are in capable of producing any CO2 emissions will have a 0% benefit in kind rate for one year, with subsequent years rising by only 1% each year.  Add this to the generous first year allowance of 100% for capital allowance claims in a business and it is a win-win situation, and it also helps the environment.

Long Service Awards – Long service awards made to employees as testimonials to mark long service where their service is not less than 20 years and no similar award has been made within the previous 10 years, maybe eligible for a tax exemption.  The award must not be cash and the costs must not exceed £50 for each year of service.

Trivial Benefits – A trivial benefit is one which:

  • cost £50 or less to provide
  • isn’t cash or a cash voucher
  • isn’t a reward for their work or performance
  • isn’t in the terms of their contract

Examples of where this would be appropriate are for gifts for birthdays, weddings or Christmas presents.