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  • Catherine Stork

Top 5 Most Common P11d Errors

Updated: Nov 11, 2020

Any benefits provided to employees must be declared and submitted to HMRC by 6th July for the previous tax year.

These benefits are items and services which an employee has received from your company in addition to their salary. This includes private healthcare and company cars. This could lead to additional National Insurance contributions for you (the company) to pay.

If you miss the 6th July deadline, you won’t incur penalties straight away. You have two weeks to sort this out or your company will incur fines of £100 each month or part month per 50 employees.

In this blog, we have compiled of list of the most common errors made when preparing P11d’s.

P11Ds are filed by the employer, not the employee – although, if you are a freelancer or contractor, you will take on both roles.

Don’t forgot the VAT

The P11d value should be the total including VAT irrespective of it has been claimed by the employer. As most businesses are so used to dealing with net costs it a very common (and expensive) mistake to leave off the VAT element on the benefit in kind declared.

Company Car list price

When calculating the benefit in kind for a car this is based on the list price of the car however many employers use the cost price or advertised price of the dealer. The list price is the inclusive price published by the manufacturer and includes all standard accessories, relevant taxes and delivery.

Medical Insurance

Don’t forget to include the Insurance Premium Tax element in your cash equivalent calculations.

Transfer of an asset

Often, benefits-in-kind are not reported where an employee benefits from the transfer of an asset at less than its market value, such as cars and computer equipment. Make sure you have assessed the benefit for tax purposes correctly, taking in to consideration the sum paid (if any) and the correct market value. A good idea is to have a look on ebay or autotrader for a similar item and keep a printout of the final cost it sells for.

Treatment for NIC charge

Identifying items to 'fit' the appropriate box can be difficult to assess. You should make sure you have applied Class 1 National Insurance Contributions on pecuniary liabilities (bills in the employees’ own names) and assessed benefits liable to Class 1A National Insurance Contributions in line with HMRC guidance.

If you want to avoid any costly mistakes or would like further guidance on preparing your P11d’s contact or give us a call on 01423 431889.

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