P11D and P11D(b) filing and payment deadlines

It’s important to tell HMRC about any Class 1A National Insurance contributions that you owe for the tax year ending 5 April 2022 by 6 July 2022 at the latest. You also need to send them any P11D forms due by 6 July 2022. Failure to do so may result in a penalty. Any Class 1A National Insurance you owe must reach HMRC by 22 July 2022. 

Remember, it’s important that you complete your P11D forms correctly the first time. If you make a mistake, it’s time-consuming to correct and your employees will pay the wrong tax in the meantime.

Further guidance is available here: how to complete forms P11D and P11D(b) 

Payrolling Benefits in Kind

HMRC are encouraging more employers to payroll employee benefits in kind rather than declaring benefits on the end of year P11D. They have included guidance on registering to use the scheme in their latest employer bulletin.

If employers haven’t already done so they should register online now or before 5 April 2022 to payroll employee benefits for the 2022/23 tax year.

The advantages of payrolling benefits in kind are:

• employers no longer need to submit P11D and P46(Car) forms to HMRC
• simpler PAYE codes mean HR teams receive fewer queries from employees regarding tax
• tax deductions in monthly payroll will be more accurate
• tax codes for individuals should change less frequently
• fewer forms for employers to complete at year-end

If you are not yet in a position to move to payrolling you can still move away from legacy paper P11D forms by submitting them online.

Reminder - P11D Forms due by 6 July

Despite the coronavirus lockdowns, HMRC still expect P11D forms reporting expenses and benefits to be submitted by the normal 6 July deadline. Employers need to submit a P11D form to HMRC for each employee you’ve provided with expenses or benefits.

Employers also need to submit a P11D(b) form if:

• You have submitted any P11D forms
• You have paid employees’ expenses or benefits through your payroll
• HMRC have asked you to - either by sending you a form or an email

Form P11D(b) tells HMRC how much Class 1A National Insurance (at 13.8%) you need to pay on all the expenses and benefits you’ve provided. The National Insurance on benefits is due by 19 July.

If HMRC have asked you to submit a P11D(b), you can tell them you do not owe Class 1A National Insurance by completing a declaration.

Remember that reimbursed expenses no longer need to be reported where they are incurred wholly, exclusively and necessarily in the performance of the employee's duties. Dispensations from reporting are no longer required, although HMRC would expect internal controls to be in place.

Note also that trivial benefits of no more than £50 provided to employees need not be reported. This typically covers gifts to employees at Christmas and on their birthdays.

Paying tax on benefits through your payroll

Employers can deduct and pay tax on most employee expenses through your payroll (sometimes called ‘payrolling’) as long as you have registered with HMRC before the start of the tax year (6 April). This can be particularly beneficial in the first year that a company car is provided to an employee as it means that they won’t get a big tax bill at the end of the year.

Employers do not need to submit a P11D form for an employee if you’re paying tax on all their benefits through your payroll. However, they still need to submit a P11D(b) form so they can pay any Class 1A National Insurance they owe.

Taxable benefit charge - returning office equipment

Employer provided equipment

If you have supplied your employees with office equipment to allow them to work from home, without a transfer of ownership, there is no tax charge when they return the equipment back to you. If you transfer the ownership of the equipment to the employee at any stage of their employment, a benefit charge generally arises on the market value of the equipment at the time of the transfer less any amount made good by the employee. There is an alternative method for calculating the chargeable benefit when equipment is transferred, more information on this method can be found in Employment Income Manual EIM21650.

Employer reimbursed equipment

If your employee has agreed to purchase their own home office equipment for use whilst working at home as a result of coronavirus and you reimburse the exact expense, unless you have specified to your employee that they must transfer ownership to you, the ownership of the equipment rests with your employee.

There is no benefit charge on the reimbursement. There is also no benefit charge if you allow your employee to keep the equipment as it is something that they already own. Further information and to check which expenses are taxable if your employee works from home due to coronavirus is available: https://www.gov.uk/guidance/check-which-expenses-are-taxable-if-your-employee-works-from-home-due-to-coronavirus-covid-19

Please contact us if you need any help in this area.

Car Benefit Reduced Where Unavailable

P11d forms reporting benefits in kind provided to employees and directors need to be submitted to HMRC by 6 July. Where a company car is “unavailable” for private use for 30 or more consecutive days the benefit is proportionately reduced.

During the various lockdown periods many employees and directors have not been using their company cars and it may have been sitting on their driveway. Unfortunately, that does not count as being unavailable.

HMRC have confirmed that they would continue to regard the car as available to the employee unless the keys or fobs are returned to the employer or to a third party such as the leasing or disposal company as instructed by the employer.

Note that where the employee is provided with a motor car with zero CO2 emissions there is no taxable benefit in kind for 2020/21 although the charge increases to 1% of original list price for 2021/22.

4th June 2021 – Hillmans Weekly Update

Below I have summarised all the main tax related updates we have seen this week.

• Self-Employment Income Support Scheme (SEISS) Fifth Grant Update
• Not all benefits need to be reported on form P11D
• The cost of Covid-19 and how this will affect your business
• VAT deferral monthly payment scheme closing soon

If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.

I hope you have a great weekend.

Stay safe and well.

Cheers,

Steve

Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100

Not all benefits need to be reported on form P11D

Despite the coronavirus lockdowns HMRC still expect P11d forms reporting expenses and benefits to be submitted by the normal 6 July deadline.

Remember that reimbursed expenses no longer need to be reported where they are incurred wholly, exclusively and necessarily in the performance of the employee's duties. Dispensations from reporting are no longer required, although HMRC would expect internal controls to be in place.

Note also that trivial benefits of no more than £50 provided to employees need not be reported. This typically covers gifts to employees at Christmas and on their birthdays.

Grants for Electric Car Buyers Cut

2020 was a game changer year for the arrival of fully ’Battery Electric Vehicles’  (BEVs) in the UK new vehicle market, with 108,205 BEVs registered in 2020, with 200,000 BEVs expected to be registered in 2021, including a game changer year for the arrival of electric commercial vehicles/vans.

By 2030, sales of new cars and vans powered wholly by diesel and petrol will be banned in the UK, with Hybrid vehicles to follow 5 years later so between now and then, most new vehicles launched will be offered with some form of electrification, accelerating demand for electric charge points across the UK, to meet the needs of small to medium enterprises.

Within the business user vehicle market, the government introduced significant  ‘Benefit-in-Kind’ (B-I-K) incentives for BEVs, effective from year 2020/2021, with just a 1% B-I-K tax liability for financial year 2021/22 and 2% in 2022/23 and frozen at 2% for 2023/24 and 2024/25.

In February 2021, the government also announced a £50 million extension of the home and workplace grants for installing charger points with the workplace charging scheme being open to small to medium enterprises, for the first time, which includes funding for the accommodation sector such and B&Bs, to provide a boost to rural areas, in places like the South West.

Last week, in a development that was unexpected and seen within the automotive industry as ‘un-helpful’, the government announced that with immediate effect, the current government vehicle Plug-In Grant was being reduced from £3,000 to £2,500 and at the same time, the list price of vehicles, including vans, that qualify for the government grant, was being reduced from £50,000 to £35,000.

In essence, the government are trying to focus on more of the grants going towards lower priced volume models, that appeal to private buyers, as well as company car drivers and remove the incentive for much more expensive models, that are typically only purchased by company executives, who still are able to enjoy the significant Benefit in Kind tax incentives that are in place.

It is thought that the government are also looking to put the emphasis on car manufacturers reducing the list price of their  electric vehicles, to make them more affordable to the masses, with Citroen, for example, responding to last week’s announcement, by announcing the list price reduction on their electric model, to below the qualifying grant limit of £35,000.

Blog Article Written By: 
Leon Wilce - Fleet Specialist Consultant
Westcar Consulting
leon@west-car.co.uk

Company Vans Were Motor Cars

The Court of Appeal have now ruled on the tax status of certain vehicles provided to employees of Coca Cola. The court has upheld the HMRC view that vans with windows and a second row of seats behind the driver are not goods vehicles but motor cars for benefit in kind purposes. 

Consequently, the income tax and national insurance payable by employee and employer is significantly higher than if the vehicles had been classified as goods vehicles. 

The income tax legislation defines a “goods vehicle” as “a vehicle of a construction primarily suited for the conveyance of goods or burden of any description…”

At the Tax Tribunal it was decided that modified VW Kombi vans failed this test whereas modified Vauxhall Vivaro vans did fall within the definition of goods vehicles. 

It has now been determined that the Vauxhalls should also be taxed as motor cars for P11d benefit in kind purposes. This means that where the vehicle is available for private use the taxable benefit will be based on the original list price multiplied by a percentage based on the vehicle’s CO2 emissions.

The decision means that employers may need to reconsider providing such vehicles. They may also need to rectify the P11d reporting in respect of earlier years and we await further guidance from HMRC.  

What is also particularly confusing, and thus difficult for businesses to deal with, is that the benefit in kind rules are not the same as the rules for recovery of input VAT and it would be useful if there was a common definition for tax purposes.

VAT Definition of "Motor Car"

For VAT purposes the definition of a motor car has been amended several times over the years. 

The current definition states:   “Motor car” means any motor vehicle of a kind normally used on public roads which has three or more wheels and either:

a) is constructed or adapted solely or mainly for the carriage of passengers; or

b) has to the rear of the driver’s seat roofed accommodation which is fitted with side windows or which is constructed or adapted for the fitting of side windows;

There are a number of exceptions to this rule: notably vehicles constructed to carry a payload of one tonne or more, i.e. double cab pick-ups such as a Toyota Hilux.

eNews - October 2014

Creating Extra Cash-flow 

Could your creative company benefit from a boost to its cash flow? If it produces computer games, films, high-end TV or animation programmes, it may qualify for a new payable tax credit.

All of these products can qualify for extra tax relief if they can be certified as culturally British, and at least a quarter of the core production costs are incurred in the UK. There are some other conditions:

- only businesses trading as companies can qualify for the tax relief, not individuals or partnerships; and- the product must be intended for release to, or to be broadcast to the general public, not produced for training or advertising purposes.
High-end TV programmes are essentially quality drama; not news, current affairs or quiz shows. Unfortunately producing original music doesn't qualify as a creative product for these tax reliefs.

eNews - Sept 2014

Late Filing Penalties 
 
From 6 October 2014 the HMRC computer will automatically issue you with a penalty if you submit your full payment submission (FPS) under RTI "late", or don't submit it at all for a month in which you paid your employees.

So what makes the FPS "late"? HMRC say the FPS must be submitted on or before the day the employer pays the employees (the "payment date"). But is that the day the funds leave the employer's bank account or the day the employee receives the money?