The deadline for reporting employee benefits and expenses is almost upon us. As a result of the impending 6thJuly 2018 deadline, accountancy firm Bevan & Buckland has been assisting more clients than ever in this area.
At the end of the tax year, employers may need to inform HM Revenue & Customs (HMRC) if any taxable benefits were handed out to members of staff over the previous 12 months. These include company cars, health insurance, non-business travel or entertainment expenses, and assets provided by an employer that have significant personal use. Each taxable employee benefit is calculated differently, depending on the type of expense or benefit provided. Most taxable employee benefits can be deducted through payroll, as long as the employer has registered with HMRC before the start of the tax year. Otherwise, businesses may need to submit a P11D form to HMRC for any taxable expenses or benefits that have not been deducted through payroll.
“Even if you put employee benefits through payroll during 2017/18, you’ll still need to send a P11D(b). You’ll also need to send a P11D to show any benefits you paid that you didn’t payroll. These forms enable the Revenue to calculate how much you need to pay in class 1A National Insurance contributions (NICs), as well as how much PAYE is due from the employee on the benefit. This is then normally collected from the employee by adjusting their tax code. Each benefit in kind has a different tax code,” said Matthew Denney, Tax Partner at Bevan & Buckland Chartered Accountants.
It’s important to get employee benefits reporting right to ensure the correct amount of tax is paid, while an exemption system is in place for certain benefits which are not liable for tax. These include costs related to travel, business entertainment, business credit cards, fees and subscriptions.
There is also a penalty of £100 per 50 employees for each month or part month the P11D(b) is late, with interest charged on late payments to HMRC. The deadline for paying class 1A NICs is slightly later, on 22ndJuly 2018 (or 19thJuly if paying by cheque). Financial penalties apply if you are late.
“We are seeing increased scrutiny from HMRC regarding the correct reporting of taxable benefits. It is not surprising that PAYE inspections are more relevant following the changes to the salary sacrifice rules. We are spending more time than we ever have assisting clients in this area, and would urge others to seek professional advice from our team as the deadline approaches,” concluded Matthew.