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.