Report expenses and benefits (P11D)

If you give employees or directors benefits in kind that are taxable, you must tell HMRC about them and pay Class 1A National Insurance on their value. You do this on a P11D for each person and a P11D(b) for the business, or by payrolling the benefit. Common examples are company cars and fuel, vans for private use, private medical insurance, cheap or interest-free loans, living accommodation and personal expenses you pay for.

Work out what to report

Report a benefit when an employee or director, or a member of their family or household, gets it because of the job and it is not covered by an exemption. Expenses you pay on someone's behalf, or pay back to them, also go on the P11D unless an exemption applies. Costs you reimburse for business travel and subsistence, uniforms and equipment needed for the job do not need reporting if the cost is a genuine business one.

Some benefits do not need to go on a P11D.

You can also agree a PAYE Settlement Agreement with HMRC to pay the tax and National Insurance on minor, irregular or impracticable-to-apportion benefits yourself, instead of reporting them. Settled items do not go on a P11D. The tax and Class 1B National Insurance on them is due by 22 October after the tax year ends.

Value the benefits

The cash equivalent of each benefit is set by statute, so use the figures for the tax year being reported.

Company cars and fuel

Use the car's list price plus accessories, and deduct anything the employee pays you towards private use.

Vans

Reduce the charge for any time the van is unavailable, or if the employee pays for private fuel.

Loans

Living accommodation

Medical insurance

Mileage in the employee's own vehicle

Deadlines

Submit the forms

Keep a copy of both forms and your working papers for 3 years after the end of the tax year they cover.

Correct a mistake

Use HMRC's online forms to correct a P11D or P11D(b) you have already sent. A corrected P11D(b) must show the new total Class 1A due, not the difference.

If you file or pay late

A late P11D(b) costs £100 a month for each block of 50 employees, or part of one. HMRC can also charge a failure-to-file penalty and a daily penalty if it continues, under section 98 of the Taxes Management Act 1970. Class 1A paid late bears interest and a penalty of 5% of the unpaid amount at 30 days, with a further 5% at six months and again at 12 months. If you send a return that is fraudulent or negligently incorrect, the penalty can reach £3,000.

Payroll the benefits instead