The small business guide to the P11D
Stay on form and learn what small businesses should know about the P11D tax form
For small businesses, keeping things in order can be tough enough without adding the end of year tax return stress on top of your to do list.
We know you want to do right by your staff, and many businesses often go above and beyond for their employees, offering added benefits on top of a salary like mobile phones and laptops, private healthcare and even a company car.
But as the old saying goes, there’s no such thing as a free lunch, and even added extras, benefits and perks of the job need to be tracked for end of year tax purposes. Which is where the P11D form comes in handy.
If you find tax taxing and can’t tell your P11D from your P11D(b), AXA can help make it simpler for you. Follow our guide below and we’ll take you through the ins and outs of the P11D tax form, so your business can keep your ‘benefits in kind’ in good shape come the end of the tax year.
What is a P11D?
The P11D is a UK tax form used to report on ‘benefits in kind’ which employees or directors receive from their employer. These are generally added extras, expenses or ‘perks’, separate from the employee’s salary or wages, and could include things like a company car or private healthcare cover.
Once submitted, the form helps the HMRC calculate the total amount of tax and National Insurance an employee will have to pay on their salary annually.
Who needs the P11D?
P11D forms are completed and returned to the HMRC by employers each year, not the employee. So, if you run a small business, at the end of the tax year you have to give the HMRC details of any expenses or additional benefits payments you give to your employees on top of their salary. This includes payments or benefits made to any members of their families, like spouses or their children. You must complete a separate form for each of your employees.
You do not need to submit a P11D form for an employee if you’re paying tax on all their benefits through your payroll.
What’s a P11D used for?
Many businesses will reward employees with various types of added extras of benefits on top of their standard salary. Some of the most common benefits in kind which would be tracked on a P11D form are listed below:
- Living accommodation and expenses
- Childcare costs
- Company cars or vans, as well as mileage and fuel allowances
- Private health insurance
- Assets provided to employees, like mobile phones or laptops
- Payments for use of home telephones
- Self-assessment fees if paid by the company
- Non-business travel and entertainment expenses
So if you’re the owner or director of a business and you’ve provided any of the benefits or extras above to your staff, you’re required to provide details of this to the HMRC via the P11D form.
How do I complete the P11D?
When getting started, it’s worth having to hand:
- Your Employer Reference Number (ERN), which you’ll be given when you first register with HMRC
- The names, National Insurance Numbers and dates of birth for all employees who have received benefits in kind in the last year
- Details of the benefits themselves, including the cost or total cash equivalent
The online and paper forms do differ slightly, so be sure to read your paperwork thoroughly. When looking online, the current P11D form has 14 separate sections which employers must complete. Below, we list out each section in turn to let you know what it is and what’s expected.
1. Assets transferred
This includes anything like property, goods or other assets which you may have purchased then transferred to an employee as part of their benefits package. If this applies to you, in this section of the P11D form you should enter the market value of the asset when it was given to the employee, or a figure based on the cost to you.
2. Payments made on behalf of the employee
For things like personal bills that your employee should have paid, but you paid instead as their employer, enter the value here.
3. Credit cards and vouchers
Given your employee any vouchers on top of their salary? Or do you give staff a travel season ticket as part of their employment with you? Enter the total cost to you of these cards and vouchers which can be exchanged for money, goods or services. Don’t include any vouchers that have already been taxed under PAYE or credit cards which are used for business.
4. Living accommodation
If you provide any living premises or accommodation to your employees or their family as part of their job it needs to be tracked on the P11D form. For example, your company may be based in Manchester but you need a staff member to work a few days per week in London, so you provide a small flat for them while they work out of London. In that case, you should enter the cash equivalent of the living accommodation provided, or if the premises are rented, use the amount of rent payable instead of the gross rateable value. Bear in mind that the rules are different in Scotland, so for more information visit the UK Government’s own P11D guide.
5. Mileage allowances
If your staff need to drive a lot as part of their job, you may look to offer an allowance for the number of miles driven in their own vehicle.
The value you can enter in your P11D form for mileage is the total figure which remains after you’ve removed the approved amount which is exempt from tax. The approved amount is the number of business miles travelled, multiplied by certain rates depending on your vehicle.
The rates in the 2023-24 tax year are:
| First 10,000 business miles | Each business mile over 10,000 | |
| Cars and vans | 45p | 25p |
| Motorcycles | 24p | 24p |
| Cycles | 20p | 20p |
Payments up to these limits are tax free, so don’t need to be reported on the P11D form. Find the full guidance on the UK Government website.
6. Cars and car fuel
If you provide a car to your employees, enter the list price of the car from day before first registration, including VAT, tax, delivery charges and number plates. You should also include the list price of any accessories fitted to the car like alloy wheels, if over £100. If there’s no list price, use a notational price – the price that would be reasonably expected to be the list price from the manufacturer for an equivalent car in the UK.
For fuel, enter the total car fuel benefit for all cars available.
7. Company vans
Similar with cars, if you provide a company van for employees it should be tracked on the P11D. These most up to date charges can be found on the UK Government website. The van benefit charge for 2023-2024 is now £3960, while the fuel benefit charge for private fuel is £757.
8. Beneficial loans
A beneficial loan is a short-term loan you might pay to an employee if, for example, they’re going through financial hardship and need some extra help. In these cases, enter the cash equivalent for each loan separately.
9. Medical treatment and dental
Many employers provide some private medical coverage as part of their overall benefits package. Enter the cost of all medical and dental expenses that you’ve paid in the tax year and all insurance premiums paid against treatment in the P11D for each relevant employee.
10. Relocation expenses
If an employee has to relocate or move in order to work for you, qualifying expenses over (£8000 in 2022) should be tracked in the P11D. Some exempt costs could include estate agent fees, stamp duty, house-hunting visit costs and removal costs.
11. Services supplied
For any services supplied where the contract is between you and the service provider, but the beneficiary is the employee, enter the additional cost in this section of the P11D. Examples could include things like counselling.
12. Assets placed at employee’s disposal
For the use of certain employer-owned assets by the employee, like the use of boats or motorcycles for example, enter the annual value of the use of the asset or any rent or hire charge, if this is higher.
There’s no tax benefit for items provided to an employee with a disability to allow them to do their job.
13. Other Items
Other items which aren’t in other categories above could include:
- Subscriptions
- Educational assistance
- Other relocation benefits (not listed above)
- Employer-provided childcare
14. Expenses Payments
There’s also a list of additional expenses payments which could be included in the P11D:
- Travel and subsistence payments
- Entertainment
- Home telephone
- Overnight expenses
You can complete the forms online using:
And if you have any problems or questions when completing your tax form, you can contact the UK Government’s Employer Helpline for advice or visit their guide on How to complete forms P11D and P11D(b).
So what’s a P11D(b) form?
In addition to the P11D form, you’ll also need to complete the helpfully named P11D(b) form too.
This is a separate form which tells HMRC how much Class 1A National Insurance you need to pay on all the expenses and benefits you’ve provided and to declare that you’ve sent form P11D to the HMRC. It basically summarises all the individual P11D forms you’ve completed for each of your employees.
You’ll need to submit a P11D(b) form if:
- you’ve submitted any P11D forms
- you’ve paid employees’ expenses or benefits through your payroll
- HMRC have asked you to, either by sending you a form or an email
When’s the P11D deadline?
The return date for the P11D and P11D(b) forms is usually around 6 July following the tax year in question. So for example, the P11D deadline for 2023 to 2024 is 6 July 2024.
If you don’t make your return by the deadline or if you submit an incorrect return, you could face certain penalties.
If you miss the deadline and fail to file your return by 19 July, your business will face a £100 fine every month, per 50 employees. There’s also a penalty if HMRC think you’ve acted carelessly or tried to deliberately mislead or evade the taxman of up to £3,000.
P11D exemptions
You don’t have to complete a P11D in all circumstances – only if you have taxable expenses for an employee or director in your company that haven’t been taxed through your payroll. And while most employment benefits could be considered taxable and applicable for the P11D, there are a couple of exemptions.
Certain expenses incurred by employees in the performance of the duties of their employment don’t need to be reported on P11D. These could include:
- Travelling expenses for business purposes, including subsistence
- Business credit cards
- Occasional taxis home
- Equipment or services to that allow a disabled person to do their job
Common mistakes when completing a P11D form
Mistakes happen, particularly when dealing with fairly complicated tax forms and assessments. And with fines on the horizon for incorrect submission of data, it’s well worth avoiding some common mistakes businesses make when completing a P11D.
Company cars being priced incorrectly
Cars can be notoriously difficult to price, and it’s all too easy to be sold a lemon. So it’s an area to pay close attention to when submitting a list or notational cost for your company car on the P11D. Incorrect list and accessory prices for cars can lead to under or overpayment of tax and Class 1A National Insurance Contributions. In addition, you should list the CO2 emissions of the vehicle, but emissions data not taken from the V5 registration document could result in an error fine.
Assets losing value
If an asset loses value, for example a no-longer-top-of-the-line laptop or last year’s iPhone, the transfer of the asset is often given under the original price on the P11D, and not the current perceived value of the asset. Bear that in mind when completing your forms.
Employee phones
If your employee uses their own phone for business calls it can be tracked on the P11D, but it’s easily overlooked come end of year tax time. Try to keep a note of all your business phone usage and have your staff do the same.
The Office Christmas Party
The annual office Christmas party is something we all look forward to, but it’s often incorrectly filed on a P11D under ‘entertainment’. Staff entertaining is actually tax free to a value up to £150 per person each year, but only if all staff are invited. So the office Christmas party would therefore be exempt from the P11D. However, if you’re having a few team drinks with a select group of colleagues, the reimbursement is a taxable expense and should be included on the P11D, unless the value is too small.
How to stay on top form with the P11D
When it comes to end of year taxes your best weapon is organisation. Take a look at AXA’s guide to keeping your business organised. It’ll help you keep a place for everything and everything in its place so that, come tax time, you’ll be on top form.
READ MORE
Protecting your employees – and your business
The P11D is a helpful way to keep track of the benefits and added extras you give to your staff, to make sure everything is all above board when the new tax year rolls around and the taxman comes knocking.
But it’s only one way to make sure you’re doing right by your staff. If you have employees, you need to have the correct level of employers’ liability insurance to protect them if they get injured or become ill as a result of working for your business. Find out more about Employers’ Liability insurance from AXA or get a quote today.
If you’re finding the P11D form difficult to understand, head to the UK Government website for full details or consider hiring a qualified professional to guide you through the process of filing.
Work hard, insure easy
Running a business is hard work. That’s why we’re doing all we can to make your insurance a bit simpler. From working to pay claims more quickly to taking the guesswork out of getting business insurance, find out what we’re doing to help.
Learn moreAll links are checked and valid at time of publishing, 29 June 2022.