This annual requirement involves reporting certain benefits and expenses provided to employees that have not been subject to PAYE tax.
Below is a guide to some of the most common and popular benefits that typically appear on a P11D.
- Company Cars and Fuel
Company cars remain a staple benefit for employees, particularly for roles involving regular travel. The taxable benefit is calculated based on the car’s list price, CO₂ emissions, and the type of fuel. If private fuel is also provided, this must be reported as a separate benefit.
Detailed records of business vs. private mileage should be kept and consider switching to electric or low-emission vehicles to reduce the benefit-in-kind liability.
- Private Medical Insurance
Employers often offer private healthcare as part of their wellbeing initiatives. The full cost of the premiums paid by the employer on behalf of the employee is reportable as a benefit.
- Interest-Free and Low-Interest Loans
If an employee or director owes money to their employer and the loan balance exceeds £10,000 at any time during the tax year, the notional interest is a taxable benefit.
- Living Accommodation
This may be provided for staff required to live close to work locations. Taxable value depends on the cost of the property, rent paid by the employee, and other expenses like utilities. Additional charges may apply if the property costs over £75,000.
- Assets Transferred to Employees
Employees may receive rewards such as computers, vehicles or other assets. The market value at the time of transfer, minus any payment made by the employee, is taxable.
Deadlines
Employers should also remember to:
- Submit P11D(b) forms where Class 1A National Insurance is due by 6 July 2025.
- Provide employees with their P11Ds by 6 July 2025.
- Pay any Class 1A NIC by 22 July 2025 (or 19 July if paying by cheque).
Reminder: Payrolling Benefits Will Be Mandatory from April 2027
From April 2027, all employers will be required to payroll most benefits in kind, rather than reporting them via P11D. This means benefits will be taxed in real time through payroll, simplifying end-of-year reporting and reducing the need for P11D forms. Now is a great time to review your current processes and consider voluntary payrolling ahead of the mandate to ensure a smooth transition.
Please do not hesitate to contact our payroll department on payroll@kilsbywilliams.com or your usual Kilsby Williams contact if you would like further information.
