P11Ds: Comprehensive Guide for Employers 2024

Need a quick brush-up on the P11D reporting process?

Below, we'll run through exactly what you need to know to report any non-cash benefits.

If you're weighing up whether not to switch to payrolling benefits you check out our dedicated guide here.

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What is a P11D?

📚 Quick definition: A P11D is a tax form used by UK businesses to report and declare the cash equivalents of benefits and expenses provided to employees in addition to their normal salaries.

The form is an essential part of the year-end processes...

P11Ds are submitted after the tax year has ended to declare any benefits accumulated over the course of that year.

The purpose of the P11D form is to make sure that the right income tax is calculated and paid on any taxable benefits you give to your employees.

Why do employers need to submit a P11D?

The P11D is essential to stay HMRC-compliant. The main purpose of the P11D form is to let HMRC know the cash equivalents of benefits and expenses that your employees receive from you outside of their regular salary over the course of the tax year.

The information shared via a P11D is used to calculate employee's income tax, National Insurance Contributions and employee tax liabilities.  

What does a P11D report?

The P11D reports on the cash equivalent of the following benefits end expenses:

• Company cars provided to employees for personal use. This includes details of the make and model of the car, its CO2 emissions, and the taxable value
• Private medical or dental insurance for employees
• Any expenses related to travel and subsistence that are reimbursed or paid for by you (the employer)
• Accommodation provided to employees 
• Entertainment expenses such as meals or hospitality provided to employees
• Details of Loans offered to employees at beneficial interest rates
• Any expenses not covered by specific categories such as vouchers, credit cards and any assets transferred to employees

Are there any benefits that are exempt?

There are some specific types of non-cash benefits provided to employees that don't attract tax liabilities (and are therefore not required to be on the P11D form).

Below are a few of the most common examples:

• Reimbursed business travel expenses (things like accommodation and subsistence costs) are usually exempt from reporting on the P11D
• Mileage allowances paid for business-related travel. This includes reimbursements for the use of an employee's own vehicle for business purposes
• A mobile phone or SIM card for business use - which also usually extends to any private use of the phone
• Work-related training is generally exempt from being reported on the P11D form, as long as the training is relevant to the employee's job
• Necessary work-related equipment such as tools, computers, or uniforms
• Trivial benefits with a cost not exceeding a set limit per tax year like small gifts (flowers, chocolates etc)
• Employer-supported childcare either through direct provision or through a voucher scheme, may be exempt, subject to specific conditions and monetary limits.
• Cycle to Work schemes where you provide bicycles and cycling equipment to your employees

What is a P11D(b)? And what are they for?

📚 Quick definition: A P11D(b) is another tax form that compliments the P11D form.

It's used to declare the total amount of Class 1A National Insurance contributions (NICs) due on all the taxable benefits you provide to your employees during the tax year.

While you'll need a P11D for each individual employee who received benefits, the P11D(b) is a single form that summarises these benefits (so you only need one of them).

• P11D form: used to report the cash equivalent value of taxable benefits for each individual employee.
• P11D(b) form: is an overview combines all of the Class 1A NICs due.

🗓 When is the P11D deadline?

The reporting deadline for P11D and P11D(b) forms in the United Kingdom is typically July 6th following the end of the tax year.

You'll need to submit P11D forms to HMRC for each employee that received benefits over the course of the tax year.

So if a P11D is submitted in July 2024, it is for benefits received between 6th April 2023 and 5th April 2024.

HMRC will then adjust employees' tax codes for the current tax year to reflect the benefits they received the previous tax year.

Note: If you submit any P11Ds (or payroll benefits, which we'll get to below), this means you'll also need to submit a P11D(b) by July 6th.

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How to submit a P11D: here's a quick step-by-step guide

Step 1: Gather information

First off, you'll need to make sure you have all the details of any benefits and expenses provided to employees. Ideally you'd collect this information over the course of the tax year to make reporting easier.

Step 2: Complete the P11D form

Use the official P11D form provided by HMRC. You can find this on the HMRC website or through your payroll software.

The form itself will be broken down into sections for different benefits and expenses. The details you need to add will depending on the specific benefits you're reporting on.

Step 3: Fill in P11Ds for each individual employee

You'll also need to complete P11D forms for each relevant employee who received taxable expenses/benefits - including identification information like names, tax codes, and National Insurance numbers.

Step 4: Calculate cash equivalents of employee benefits

Next, calculate the cash equivalent value for each benefit or expense. The cash equivalent represents the taxable value of the non-cash benefit and is used for income tax calculations.

For something like private health insurance, for example, you'd just add the annual value...

And then for more complex benefits (e.g. a company car), you'd need to submit information like the model, price and mileage.

Step 5: Use the P11D(b) to report on total figures

If you submit a P11D, you'll also need to submit a P11D(b).

You just need to include the total cash equivalents of all benefits and expenses provided to employees. This form is then used to calculate Class 1A National Insurance Contributions (NICs) on these benefits.

Step 6: Declare accuracy and submit to HMRC by 6th July

You'll be asked to sign a declaration confirming the accuracy of the information and your responsibility for any associated tax liabilities.

Then, to submit your forms you can either use HMRC's online portal (this is the preferred and most efficient method) or submit a paper copy.

Step 7: Provide copies to employees

Once submitted, you'll need to send copies of the P11D form to each relevant employee.

Step 8: Pay Class 1A NICs

You may also need to pay Class 1A NICs owed on the total cash equivalents declared on the P11D(b) form.

The payment deadline is usually July 19th (or July 22nd if paying electronically).

How to correct errors on P11Ds and P11D(b)s

If you notice any errors that you need to correct - don't panic!

You can let HMRC know via their correction forms.

• P11D correction form
• P11D(b) correction form

If you’re making corrections to your P11D(b) submission, just be sure to include the total amount of Class 1A National Insurance you need to pay, rather than the difference from the previous version with the error.

P11D example: here's what the form actually looks like 👇

What are PAYE Settlement Agreements? How do they affect the P11D process?

📚 Quick definition: A PAYE Settlement Agreement allows employers to settle the tax and National Insurance Contributions on certain minor, irregular, or impracticable-to-report benefits and expenses provided to employees. Under a PSA, employers take on the responsibility of paying the tax and NICs on behalf of employees for specific items - which means a more consolidated approach that exempts employees from certain individual tax liabilities.

Under a PSA, you, the employer, enter into a formal agreement with HMRC...

You agree to pay the tax and NICs on behalf of employees for the specified items so that you don't need to report these individually on the P11D for each employee. 

Instead, they'll all be summarised on a single form for all eligible employees.

Which benefits does a PSA cover?

Here are some of the most common benefits reported via a PAYE Settlement Agreement. Generally, these will be the more one-off, harder-to-attribute expenses.

• Staff entertainment: staff parties or events
• Trivial benefits: Small, non-cash benefits provided to employees, such as gifts or rewards
• Irregular expenses: Expenses that are irregular or difficult to attribute to specific employee
• Incidental expenses: Minor expenses incurred by employees in the course of their duties that are impracticable to report individually
• Corporate credit cards: Certain expenses paid using corporate credit cards, particularly where it's challenging to allocate individual transactions to specific employees

🗓 PAYE Settlement Agreement submission deadline

A PSA means you need to make a single payment to HMRC to cover the tax and NICs for all items included in the PSA.

This is usually due by July 6th following the end of the tax year.

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Would you be better off payrolling benefits? 

📚 Quick definition: Payrolling benefits just means including the cash equivalent value of certain taxable benefits provided to employees in their regular payroll calculations.

Until fairly recently, submitting a P11D was the only way you could declare employee benefits.

In 2016, HMRC introduced the payrolling benefits system so that you can declare taxable benefits as part of your regular payroll process. This means you'll be able to avoid the usual end-of-year P11D reporting.

Instead of P11Ds, a full payment submission will be sent to HMRC every time you pay your employees.

An FPS will essentially acts as a summary of all benefits paid to all relevant employees, rather than having a P11D form for each employee.

Employees will pay the same amount of tax. The only thing that changes will be when it gets paid:

• P11Ds: Reporting is done at the end of the tax year so there'll be an amendment to their tax code the following tax year.
• Payrolling benefits: Tax is paid in real-time in the year the benefit has been provided.

Is it worth making the switch to payrolling?

Payrolling benefits is widely considered a more efficient way to declare benefits, although their may be some minor pitfalls.

If you switch to payrolling, benefits will be double taxed in the first tear following the transition. Employees will be taxed in real-time which means if your employees had benefits in the previous tax year and the current tax year, they will have to pay tax twice.

It's worth noting that although this is a reason some businesses choose to stay with P11Ds, this is a on-off cost that will not effect future tax years.

Advantages of payrolling

• Less admin work
• Real-time tax deductions
• Better cash flow
• Improved payslip transparency 
• Reduced risk of errors
• Flexibility to make tax adjustments 

Potential drawbacks

• Benefits will be doubled in the first tax year after you switch to payrolling
• Certain benefits will still need to be reported via P11Ds

Do you still need P11D(b) if you payroll your benefits?

Yes, you will still need to submit a P11D(b) if you payroll benefits.

Whilst payrolling will declare the tax... some benefits will also incur National Insurance contributions (Class 1A NI).

This is why it's so important to keep a record of the benefits you provide to employees whether you're reporting benefits on P11D forms or payrolling.

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🔑 Key dates to keep track of

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How does payroll software make the P11D process easier?

Using payroll software to report on benefits will make the process quicker, easier and reduce the risk of errors - however you choose to declare them.

Here's how P11D reporting works in Pento 👇

P11Ds FAQ

What is the P11D form used for?

The P11D form is used for reporting details of taxable benefits and expenses provided by employers to their employees. It's submitted in every July so that HMRC can assess the tax liabilities of employees based on the non-cash benefits they receive in addition to their basic salary.

Do I need to submit a P11D if no benefits are offered to employees?

If you don't not provide any taxable benefits or expenses to employees, you may not be required to submit P11D forms.

You may also want to check whether any minor expenses or benefits you do offer are taxable, as these may also be exempt from P11D reporting.

When is the P11D due?

The P11D deadline is the 6th July following the end of the tax year. You'll be reporting on the previous tax year, not the current one.

Are there P11D exemptions?

Yes, some benefits and expenses such as business travel expenses, work training, staff parties and cycle to work schemes don't need to be reported via P11Ds, so long as they meet certain criteria.